Washington, D.C., Sep 23 - By Sarah Needleman; Wall Street Journal

Several provisions of the health-care overhaul that go into effect on Thursday will expand the amount of coverage that many small-business owners provide their employees. But the changes are also expected to increase insurance premiums.

The changes include restrictions on annual limits; new appeals processes; the extension of dependent coverage up to age 26; an end to plans that cancel coverage for children with pre-existing conditions; and free preventive-care services such as mammograms and colonoscopies. Other provisions of the health-care law will be phased in over the next few years.
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As a result, many small-business owners will see their insurance premiums increase in 2011, says Michelle N. Dimarob, senior manager, legislative affairs, for the National Federation of Independent Business, a small-business lobbying group in Washington, D.C. "You don't get something for nothing," she says. "You've got a lot of policies that are now covering things they weren't covering before. They're going to have an added cost."

Just how much policies might go up will depend on the type of coverage that small businesses currently offer their employees, says Robert Zirkelbach, press secretary for America's Health Insurance Plans, a national association in Washington, D.C., representing nearly 1,300 health-insurance providers.

"Small businesses that don't have many of these benefits today are going to see a bigger increase in their premiums as a result of the new mandates than those that already have them," he says. "It's a basic principle of economics."

But on the flip side, increases in premiums might end up being offset by a reduced need for costly medical services down the road, says Wendy Somerset, a lead member of Main Street Alliance, a national small-business group. Also chief executive of Furniture and Appliance Outlet, a 10-employee retailer in Twin Falls, Idaho, Ms. Somerset says gaining access to free preventive care "will save us money" because workers may be able to detect and treat diseases such as breast and prostate cancer earlier on.

Entrepreneur Alexander Grgurich sees another upshot to the new provisions. He'll be able to re-join his parents' health-insurance plan, which he was dropped from after graduating college in 2008.

Mr. Grgurich says he wasn't worried about the lack of coverage until he realized it could be "disastrous" to his start-up, Foundry Coworking LLC, a provider of collaborative office space in Des Moines, Iowa, "even if I broke a small bone." The anxiety had "distracted me from building my business," he says. Now, he plans to focus more on his start-up and hiring his first employees.

By contrast, some business owners say they're holding back on creating new jobs because they're unsure if the newly added provisions will increase their health premiums or those of their customers. Among them is Rick Ledesma, owner of DataLogic Software Inc., a software company in Harlingen, Texas, with 15 employees. "We can't plan to hire in this environment," he says. "It's not just necessarily your business but also the people you do business with who might be impacted. If it impacts them, it will impact you indirectly."