NU Online News Service, Sept. 7, 4:02 p.m. EDT

Tax credits in the health care reform law designed to offset health insurance premium costs mean that small businesses will be one of the first groups to benefit from the legislation, according to a new report from the Commonwealth Fund.

There are other provisions in the legislation that will help small businesses reduce the estimated 18 percent differential between the cost of health insurance for small and large companies, the report said.

These include establishment of state-based insurance exchanges that promise to lower administrative costs and pool risk more broadly, and creation of new market rules and an essential benefit standard to protect small firms and their workers, the report said.

The Commonwealth Fund report projects that up to 16.6 million workers are in firms that would be eligible for the tax credit, starting this year through 2013.

And, the report says, over the next 10 years, small businesses and organizations could receive an estimated $40 billion in federal support through the premium credit program.

The report notes that small businesses have "historically struggled" to find adequate health insurance coverage.

On average, the report said, small firms pay up to 18 percent more in premiums than large firms do for the same health insurance policy.

In these plans, a higher share of the premiums is used for administration, marketing, insurance broker commissions, underwrit-ing and other overhead costs of the insurance carrier.

In releasing the report, Commonwealth Fund President Karen Davis said the new law "is a big step forward for small businesses and their employees."

She said, "Not only will business owners see immediate benefits from the tax credits, but owners and employees alike will be protected from steep premium increases and high out-of-pocket costs, ensuring they will have access to the stable, secure health insurance they deserve."

Additional savings will be realized by 2020 through provisions that reduce insurers' administrative spending and increase competition among insurers participating in insurance exchanges, the report said.

Special Reports /

Health Care Law To Benefit Small Businesses, Report Says

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