PEORIA -- What will be the impact of the new Affordable Care Act, aka Obamacare, on small businesses and the economy? How will the state exchanges, also known as marketplaces, affect what happens?
Here are two stories on these issues. The first is from the Peoria Journal Star, by veteran medical reporter Dean Olsen, who now works for the Springfield daily.
The second is from free lance writer Ginger Wheeler, who has been studying the issue.
Obamacare and Its Possible Effects for the Small Business Owner
By Ginger Wheeler
The landmark Patient Protection and Affordable Care Act (PPACA) aka Affordable Care Act (ACA) or simply "Obamacare" is now the law of the land after having survived a Supreme Court Challenge (National Federation of Independent Business v. Sebelius) on June 28, 2012, and the 2012 fall federal elections when Barack Obama and the democratically controlled United States Senate were reelected by the American people. Many people and business owners fear the many unknowns that implementation of the law brings. Yet many experts are urging business owners, especially small business owners (under 50 employees), to learn more about the law before passing judgment.
Almost everyone agrees the law and its upcoming online health insurance exchange marketplaces (for the purpose of this article we will just refer to these entities as simply "marketplaces") have unknown details and unknown unknown details–and unknown costs. Every state or group of states must work out their own marketplaces, according to the law, or the federal government can set up a marketplace for them.
Many reports out there have indicated that small businesses should see their health insurance costs go down over time. But it's difficult to predict how marketplaces will trend. One thing is certain: the law is complex and there are exceptions to many rules. Also the law has many built-in sliding scales to consider when one is attempting to determine what new healthcare costs will be incurred under the law.
That being the groundwork for the discussion, the theory goes because the new law regulates more tightly the insurance companies, specifically how much of every premium insurance companies must spend on delivering healthcare, costs should go down. In addition, since Massachusetts implemented a very close, if not, similar version of healthcare for its citizens, many have looked at it as the testing ground on the marketplaces. A lot has been learned, which should keep costs in check for health insurance premiums.
Additionally, theoretically with a huge influx (tens of millions) of new customers coming to private health insurance companies for mandatory insurance as of 2014 healthcare costs too should start to come down. Reasons? There are more customers to share the burden of coverage, in addition to more regulations to keep permium costs (and health insurance company profits) in check and fewer uninsured patients showing up for last minute, last ditch (read: very expensive) health care services. Plus with more people having insurance and more services required to be included in the coverage (such as preventative care services) fewer people will get so sick as to require the last minute, last ditch, very expensive services. The nation will theoretically get healthier.
That is good news for business. In practice, businesses with more than 50 employees really won't see much of a difference in the way they insure their employees. Ninety-nine percent of large businesses (200+ employees) already offer their employees insurance and will continue to do so under the new law, or face stiff penalties.
Small businesses (under 50 employees) will probably want to continue to offer their employees health insurance as a benefit for the same reason they do now. It's not mandatory now. It's not going to be mandatory. But it's a good way to attract and keep the best talent, so why would they want to change that? Plus the cost of their health insurance premiums–which have been rising on average 9 percent per year for the past nine years–should go down under Obamacare over time, hopefully.
Smaller business (under 25 employees in most states, but under 100 in some, possibly) will see the most improvement. These businesses now struggle to offer health insurance because of the costs. It costs much more to insure a small group of people than it does to insure a larger group. Smaller businesses that choose to offer health insurance could be eligible for some nifty tax credits. Studies have shown that many small business owners are unaware of the new tax benefits they could be entitled to if they do decide to offer health insurance to their employees[1]. Small businesses will also purchase health insurance through the marketplaces and studies show that when business owners learn this, the likelihood that they may decide to offer health insurance to their employees almost doubles[2].
Of course individuals, even hard-to-insure individuals, will be able to purchase their own insurance through the marketplaces in their state of residence. Many of the details of these marketplaces, which must be set up by 2014, are still sketchy, but should be in the process of being worked out about now.
Some have compared the coming change in the way we will be purchasing health insurance to the change in the way we now purchase airline tickets versus the way airline tickets used to be purchased through travel agents. Remember those days? But as soon as airlines became deregulated and started offering tickets directly to passengers, competition drove prices down. It also drove a lot of travel agents to change the way they did business and the services they offered. The same thing is probably going to happen to health insurance agents.
When you understand more about the coming changes because of Obamacare, it eases some of the fear. For more information, readers are encouraged to research www.smallbusinessmajority.com, http://www.irs.gov/sbhtc, and download the following PDFs:
For Small Businesses: The Facts on the New Health Care Law provided by the U.S. Department of Health & Human Services
and Good Business Sense: The Small Business Health Care Tax Credit In the Affordable Care Act provided by Families USA and the Small Business Majority.
Comments