Six years into the Affordable Care Act, small businesses in Massachusetts say they continue to struggle with the cost of extending health care coverage to the uninsured.

“The dream of the ACA — to extend affordable, quality health care coverage to nearly all uninsured Americans — is laudable,” wrote Robert C. Pozen, former chairman of MFS Investment Management and now a senior lecturer at the Harvard Business School and a senior fellow at the Brookings Institution. Left unsaid in Pozen’s 2015 blog post, but clearly suggested, was the addendum that the devil is in the details.

The backbone of Main Street — the small business employers that are the core of the Bay State’s economy — couldn’t agree more.

The ACA, better known as “Obamacare,” has gone a long way toward lowering the number of uninsured Americans. But, says a number of local business owners and industry trade groups, the goal of providing affordable health care is far from being achieved. And worse, say some, the financial burden of providing affordable care to all has fallen disproportionately on the backs of small businesses and their employees.

“Double-digit health insurance premiums increases for Main Street, brought about by bad public policy and a wealth shift to the largest healthcare providers, is the single largest contributor to stagnant job growth for small businesses,” said Jon Hurst, president of the Retailers Association of Massachusetts (RAM), which represents 4,000 member stores and restaurants across the Commonwealth.

A recent RAM survey found that in the 10 years since Massachusetts adopted its own version of the ACA, health insurance premiums increased by an average of 12.2 percent for RAM members. During the same period, the survey found that premiums for the Group Insurance Commission (GIC) that cover state employees increased by 4.5 percent, while those for tax-payer subsidized plans in the Massachusetts Health Connector went up by 1.76 percent.

“Small business health insurance coverage in Massachusetts is now best described as a tax, rather than insurance,” said Hurst.

Back in the Beginning

Massachusetts got a head start in the march toward health care reform. Ten years ago this month, former Gov. Mitt Romney, with support from the Legislature, signed into law what many now refer to as “Romneycare.” Because so much of the ACA was based on the Massachusetts model, many in the small business community thought that federal health care reform would play out more easily here in the Commonwealth.

Not so, according to Christopher Geehern, executive vice president of Associated Industries of Massachusetts, which represents many of the state’s small and medium-sized manufacturing companies.

“Small companies in particular have been profoundly disappointed by the way federal health care reform has played out in Massachusetts,” Geehern said.   

Rule changes that will eliminate some of the rating factors insurance companies use to determine premiums, such as industry, group size, and participation rate, are gradually being phased in for small businesses with 50 or fewer employees. According to Geehern, the result of this rule change may mean that small companies could see their rates increase or decrease by more than 50 percent as these changes are enacted.

“If rates were to go up by that much, it would obviously be a huge shock for a small company,” said Geehern.

Originally, the ACA would have extended these rule changes to include employers with 51-100 employees, but with an intensive lobbying campaign against this provision — including efforts by Gov. Charlie Baker and local business trade groups like AIM — Congress amended the ACA early last fall and exempted these medium-sized businesses from the small group requirements.

“Congressional movement on this was a significant development, but it underscores one of the big frustrations of dealing with the ACA, namely the toxic nature of the politics surrounding health care reform,” said Geehern.

Medicare limitations on rehabilitation

Rising insurance premiums are not the only devil in the details of the ACA.

Kate Norfleet, executive director of Neville Center at Fresh Pond, a skilled nursing rehabilitation facility in Cambridge, is also concerned about new restrictions under the ACA on Medicare utilization. Facilities like the Neville Center rely heavily on the rehabilitation of patients who have been hospitalized. Under the ACA, Medicare referrals to rehab facilities are paid for only if a patient has spent at least three nights in an acute care hospital.   

Because many patients tend to be discharged from hospitals sooner than that three-night period, fewer people are now able to access Medicare benefits for rehabilitation at facilities like Neville Center.

“Nationwide, there’s been a marked decrease in post-acute Medicare rehabilitation utilization,” said Norfleet.

In addition, accountable care organization (ACOs) were established under the ACA to help control health care costs. They are incentivized by the federal government for keeping rehab stays at Neville and similar facilities to a minimum.

“If a patient gets discharged back into the community successfully, we all win,” said Norfleet. “But if the patient has to return to the hospital within a month after leaving the rehab facility, we all get penalized.”

Achieving the right balance between the laudable goals of the ACA and its devilish details is likely to take some time.

Transparency is often lacking

Getting everyone on the same page would go a long way toward finding solutions.

“Trying to remedy what’s not working well within the health care system is something that will require everyone working together, including the lawmakers, hospitals, healthcare providers and employers,” said William F. Grant, chief financial officer of Cummings Properties in Woburn who chairs AIM’s Policy Committee on Health Care.

Cummings participates in a managed-care tier program that lets employees decide where they want to spend their health insurance premiums. Through internal education, the company has had good success in directing its employees from higher-cost tier 3 plans into lower-cost tier 1 plans. As a result, the company has had a fairly level cost basis for its health insurance.

Grant said his company gets frustrated because there is not enough transparency in the experience data gathered by health care insurers. As a result, he said, best managed-care experiences cannot be shared and adopted by other companies.  In Cummings’ case, the company stresses wellness in it health care education. Limited transparency of Cummings’ experience with its wellness programs means there is no incentive for other companies to benefit from that experience.

Administrative burdens are onerous for many

Massachusetts employers also comment frequently on the administrative burdens of the ACA. A prime example is found in the forms employers must supply to the IRS to prove that health insurance has been offered to their employees.

Gathering the data needed to comply with this requirement, plus the process of distributing it to the proper authorities, is a complex and cumbersome process.  Cummings has the resources to have developed its own in-house reporting system, which Grant estimates takes up between 200 and 300 hours of time between its human resources and IT departments. But not every company has the resources to do it in-house.

According to Grant, some of AIM’s member companies have been outsourcing the ACA reporting requirements to external consultants such as payroll processing companies, accounting firms, and healthcare consulting outfits.

Brenda Copper works for a healthcare consultant. She is a senior vice president at Aon Consulting, a global provider of human resources solutions and outsourcing services.

“The primary concerns we hear over and over again are around the increase in healthcare insurance costs, the pressure it’s putting on employers’ ability to be profitable in their businesses, and the pressure it’s putting on their employees’ compensation as benefits take up a larger and larger share of their total compensation,” Copper said.

The trick for employers, she said, is to achieve the delicate balance between maintaining an attractive and competitive benefits plan at a cost that can be affordable to both the employers and the employee. Determining where the employer wants to place the fulcrum in striking that balance is what Aon seeks to learn when assessing the employers’ cost pressures and designing a health care benefits plan that also resonates with employees.

Shifting the burdens

AIM recently surveyed its small to medium-sized businesses about their benefits programs. Perhaps not surprisingly, the dominant benefits concern for Bay State companies is controlling the cost of providing health insurance for their employees.

According to the annual AIM benefits survey, employers are addressing those escalating health insurance costs by adopting high-deductible, consumer-driver health plans, often with higher co-pays for medical services. Massachusetts’ employers have apparently decided that these cost-containment strategies are a better way to deal with soaring premiums than providing financial incentives through tiered network programs that try to steer employees toward low-cost, high-quality doctors.

The trend toward increased deductibles and co-pays is national in scope. Research by the Kaiser Family Foundation indicates that deductibles for all workers have risen almost three times as fast as premiums and about seven times as fast as wages and inflation since the ACA was signed into law in 2010.

“As with any large, broad-ranging piece of legislation, it takes time to fine tune things,” said AIM’s Geehern. “Some things may work well, some may not work at all. Which is all the more reason why we need to continue working together to achieve a better balance. ”