Health Insurance Reform a Double-Edged Sword

Regulatory reform often has unintended consequences; the current debate over health insurance reform is no exception. With proposed government subsidies, as many as ten million low-wage employees may choose to drop their employer-provided health insurance and purchase coverage on the open market. With such attrition rates, small businesses may find their group purchasing power reduced, making it more expensive to insure the remaining employees. This could draw another ten million employees into the individual market, if small businesses are forced to drop their coverage plans due to the crowding out effect of the government exchange. According to a survey of the National Small Business Association, nearly 10% of small business owners are contemplating dropping their medical insurance coverage next year. The uncertainty around health care reform makes a lengthy debate expensive, with the cost falling disproportionately on small businesses.