The Affordable Care Act—with its promise of reining in costs—was passed into law more than 10 years ago, yet today small businesses are still fighting the rising price tag of health care.
One owner of a local restaurant chain here in Austin has told me that it’s precisely the flaws of the Patient Protection and Affordable Care Act that make providing access to health care so burdensome for small business owners and their employees.
With slightly more than 50 employees, he explained how he feels helpless with ACA in place. Countless times, employees have asked how to enroll in marketplace insurance and how the expenses will be covered, only to find that rising premiums make affording coverage impossible. While eligible for insurance, most of his employees do not take it.
Across the private sector, businesses like his that employ between 50-99 people on average have only a 66.6% take-up rate for enrollment. Furthermore, some of his employees find themselves in the Medicaid gap and see no affordable alternative option.
This business owner explains, “my employees work hard and often are fighting their way out of poverty. There should be no reason why they do not have access to care that does not financially burden our business, let alone themselves too.”
Frustrated by high administrative costs and with a system of marketplace insurance that employees do not even utilize, he worries that Obamacare remains an ineffective attempt at addressing health care for all.
The National Federation of Independent Business (NFIB) claims that the “Cost of Health Insurance” continues to be the number one problem for small businesses in its Small Business Problems & Priorities report. This problem ranks first in every subcategory of business in the survey except for one. When ACA was first rolled out, classifications of business owners who would need to provide healthcare for their employees through the employer mandate were set forth. Failure to comply would result in financial penalty in the form of a tax.
If small businesses have 50 or more full-time employees and do not aid employees in the purchase of health insurance, they can face up to $2,300 to $3,000 in penalties. As a result, some businesses were incentivized to outsource or reduce their labor force below 50 individuals to evade the employer mandate; these measures can spiral into unemployment and loss of productivity.
The previously mentioned business owner has had to generate a new position under HR to coordinate and facilitate the employer mandate, within an already small-staffed corporate office. He says, “we, the small business community, want meaningful reform to address these unintended consequences of Obamacare, while simultaneously finding affordable solutions to provide care for our employees.” The additional costs and administrative burdens associated with ACA place financial strain on small businesses without providing affordable coverage through the marketplace.
Other key drawbacks of Obamacare include rising premiums, a smaller choice of providers on the marketplace, and a more limited pool of doctors. Sean Hackbarth, Senior Editor at the U.S. Chamber of Commerce explains that small businesses saw a glimmer of hope when the Small Business Health Options Program (SHOP) exchanges opened. However, the hopes of business owners and employees did not come to fruition. The obligation to establish a form of health care accessible to all employees has generated a climate of frustration within the small business community.
Proponents of Obamacare valiantly claimed that enrollees would see a decrease in premiums; however, this was not the case, due to new benefits mandates and new taxes on providers, drugs, and medical devices, increased costs that are ultimately passed on to consumers via skyrocketing premiums. The pressure from small businesses for politicians on both sides of the aisle to work toward viable solutions to the rising cost of healthcare has not subsided. Lawmakers appear to remain divided across party lines.
Efforts toward repeal are in full swing as Texas v. Azar will be heard in the coming weeks by the Supreme Court. The case will again decide on ACA’s constitutionality. Since the Tax Cuts and Jobs Act of 2017 made the individual mandate tax penalty $0, this has opened a legal pathway through which ACA could be repealed on the grounds that the mandate is an invalid tax. Without bringing in revenue, Congress has no constitutional obligation to uphold ACA.
Elimination of ACA could prove beneficial to Americans as it gives states the power to build meaningful legislation to counter the unintended consequences of the policy. A world with comprehensive healthcare reform would reflect a reduction in the cost of prescription medications, increased price transparency, lowered premiums, and other care options such as direct primary care (DPC). Whether reform or repeal are in the making—it is clear, small businesses and their employees still need feasible solutions from lawmakers to address flawed health care policy.