Small businesses not in mandate, but
health care changes could have impact
Tuesday, July 16, 2013 3:50 AM
Health care weighs on the minds of many Americans as the costs can take up a major chunk of earnings. Although many aren't happy with the current system, there is skepticism about the overhaul proposed by President Obama.
The recent decision by Obama to suspend the health insurance mandate of the Affordable Care Act, also called Obamacare, adds fuel to the skepticism.
The reform requires businesses with more than 50 employees to provide a prescribed set of health insurance benefits or pay a penalty of about $2,000 per employee. The law was to take effect on Jan. 1, 2014, but Obama announced he is postponing this until 2015 to give employers more time to comply with the new rules.
Republicans accuse the president of playing politics by delaying the controversial provision until after the mid-term elections in the fall of 2014.
Supporters point out that 95 percent of the businesses with 50 or more employees already offer health insurance so it won't have much effect for the majority of Americans.
However, a third view, that of people who study public policy for a living, is that the status quo is the problem, according to columnist Ross Douthat of the New York Times. The consensus is that employer-provided health insurance coverage is an unsustainable relic - a burden on businesses, a source of "perverse incentives" for the health care market and an obstacle to more efficient, affordable and universal coverage.
Douthat says the business mandate is mostly just a political device designed to hide the full cost of the bill and discourage employers from eliminating employee coverage too quickly once Obamacare's new exchanges are up and running.
The decision has little effect on businesses in our area because nearly all local businesses are under 50 employees so there is no mandate for them. However, a transition from a system where the human resources departments of big companies act as welfare states to a system based on exchanges and subsidies, although very disruptive, may be in the best interests of small town businesses.
Many businesses of fewer than 50 employees don't offer health insurance, not because they don't want to, but because costs are nearly prohibitive.
My company provides health insurance, but fewer people are taking it because the costs have become so high, especially for families with children. This has nothing to do with Obamacare, which actually helps some by providing a tax credit for the businesses that offer health insurance, because it has been happening for years.
In a small company with just a handful of people using the company health insurance, the pool is tiny. For small employers' health insurance, they can't spread the costs over hundreds or thousands of employees, so if one person draws on the policy with a health problem in one particular year, everyone's rates go up the next year.
We've had rate increases of 20 and 30 percent some years. We celebrate when it is near zero, a rare occurrence; our rates have never gone down in all the years that health insurance has been offered to our employees.
As you can figure, even if we had as many years of near zero increases as we have 20 percent increases, which we haven't, over time our rates will still rise far more than the average pay rate. Even with the company paying half the cost of the employee's policy, it is unrealistic for a family to go on our policy anymore, although years ago we did have some families with children taking part in the program.
The trend isn't just a burden for the businesses. It hurts small towns. There are numerous examples of people who have quit jobs or even closed one-person businesses so they can get a job with the Mayo Clinic or other large institution only for the health insurance.
If businesses were relieved of providing mandated insurance, the playing field would become more equal as the health insurance industry favors large companies with their larger pools. If people could get reasonably priced quality health insurance on their own, they could choose to work where they want or start a new business without fear of risking their health.
What the replacement for employer-provided health insurance would look like is being debated as people from the left and right have different views.
However, maybe it is time to really try an alternative without the added baggage to mask the real changes proposed. Avik Roy, a conservative critic of the mandate, wrote in Forbes magazine recently that if you like Obamacare and want it to work, you don't need the employer mandate. If you have the same view as he does and don't like Obamacare and don't expect it to work, then all the mandate does is delay a necessary reckoning with the new system's flaws.
That may not be a comforting view, but doing nothing only props up a dysfunctional system that keeps getting worse.