With our economy the way it is these days, sometimes people forget that the backbone of our economy are small businesses. Small businesses not only grow into large businesses, they also do quite a bit of the hiring as well, something that is desperately needed in today’s economy. Sadly, according to a story in the Los Angeles Times entitled, “Health insurance rate hikes hitting California small businesses could hurt state’s economic recovery,” small businesses are facing yet another hurtle that, as the title of the article says, could hurt the economic recovery of not just business in California, but elsewhere as well.

According to the article, health insurance companies are raising their rates anywhere from fourteen to seventy-six percent depending on the companies involved. This is causing small businesses to either stop hiring altogether, or to lay off workers if they wish to keep health insurance coverage, while some companies are getting rid of insurance altogether, which doesn’t help make them more competitive when they ARE trying to hire new talent.

The result of health insurance companies raising their rates — which is happening for a variety of reasons, such as inflation, claiming to have priced plans too low before, so they now need to raise rates, or losing money on other plans — could be that small businesses either stagnate or go out of business entirely. This is a real problem if we want to start seeing economic recovery, which will rely on more small businesses hiring workers, which they can’t do if they can’t afford health insurance for more employees.

According to the article, health insurance premiums have risen 180% cumulatively over the last decade for small businesses, while they have only risen 146% for larger businesses. This is a serious problem that, if left unchecked, could hamper not only growth in California, but other states like Texas, Ohio, Florida and so on. Sadly the article doesn’t talk about any solutions because small businesses usually can’t negotiate their terms, similar to individuals.

Hopefully the situation will come to a point where small businesses can afford insurance, enough that they can also afford to hire new people. With our economy in such dire straights, small businesses need to be supported, not gouged.

We don’t usually cover COBRA related topics here, because honestly it doesn’t pop up in the news that often, but that’s likely to change in the coming months, especially with how the recently-signed health care reform law changes things for COBRA recipients. The story we’re looking at today, “Health Insurance Dilemma: COBRA Subsidies Will Soon Run Out for Many” from DailyFinance, talks about how COBRA is about to run out for many people, and what people can do once they do lose coverage.

COBRA, if you’re unaware, COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, and was passed in 1986. It’s a federal program that grants individuals who have lost their jobs health insurance coverage. Back in February, 2009, President Obama signed the American Recovery and Reinvestment Act, which increased government subsidies on COBRA to 65% of the premium, greatly decreasing what recipients would have to pay. This, in turn, saw nearly a doubling of enrollment into COBRA.

Well, at the end of this month, those subsidies will run out, leaving a lot of people using COBRA what to do next. Sadly, people leaving COBRA have few options under current law, even fewer if you have pre-existing conditions. Many health insurance companies currently won’t take people with pre-existing conditions — though that is changing, thankfully. Certain people are also eligible, under the Health Insurance Portability and Accountability Act, or HIPAA, to purchase individual health insurance policies despite pre-existing conditions, but only within sixty-three days after their COBRA policies expire.

Another wrinkle is that people are only eligible for COBRA for eighteen months. After that, you’re on your own. Options such as high-risk pools — which begin next month — will be available, and state-run Medicaid programs are available for those who qualify. Though some people may find more options once the health care reform legislation fully takes effect, for right now this causes an odd situation for a lot of people.

The main crux of the article is not to sit idly by and wait to make a decision. With hard deadlines for coverage, people under COBRA need to move now, not May 31st when the coverage runs out.