Fullbright 1 Mark Fullbright Ms.

Molhere English 112-42 Nov 22, 2013 Is the Affordable care act good for small business?

Small businesses havent had it easy when it comes to health coverage. The heavily debated Affordable Care Act was signed into law by President Obama back in 2010 to help give those businesses a more affordable option. Over the last couple of years the healthcare private sector has been a turbulent place for small businesses to go and offer affordable coverage for themselves and their employees. According to Whitehouse.gov, Over a decade, the average annual family premiums for workers, at small firms, increased by 123%, from $5,700 in 1999 to $12,700 in 2009. This means that the ACA should impact businesses for the better, right? Well I think it will. One of the main purposes of the ACA is to bring affordable healthcare coverage to those who have been unfairly taken advantage of by large insurance firms in the past. In turn, with more businesses pooled in the market place or exchange program, the more competition and in turn more competition drives down prices for coverage. Cheaper prices for coverage will boost the number of people with the healthcare coverage. I think most everyone wins. After watching the media over the last several months, I can understand why there is a huge uncertainty among a lot of small business owners. The biggest question is what does the ACA offer to small businesses and the consequential effects on those businesses? Knowledge is a key factor when asking that question. Who has sat down and actually read the ACA and really understood what it means? Well there is a huge misunderstanding for a lot of Americans who

Fullbright 2 have trust in media and the government to explain it to them. There are such big opinions out there that stall the research into the subject for individuals. Business owners fare the same fate as well and find themselves scrambling to just keep up with the new laws that they have to adhere to. Some people may lose their coverage all together because its cheaper for larger firms to pay a small fine per employee rather than continue mandatory coverage. Then there is the trust that the exchange program will thrive and drive prices down enough to eliminate extra cost and turn them into profit. The recent launch of the Healthcare.gov health insurance marketplace was completely botched and full of bugs and issues. We can only hope this doesnt give us a clear picture of whats to come. How can we have any faith or trust in a Government run system if they cant even get it off the ground? After watching several different news stations such as CNN, NBC, and ABC news, its said in several reports that we spent around $600 million on the launch. Thats incredibly surprising. Consider that since its conception on Oct 1, 2013 the Healthcare.gov website is still plagued with bugs and issues and is still open for business and taking orders. It was estimated that 500,000 individuals would be signed up in the first month. With all of the trouble the launch of the website has caused the numbers are only around the 26,000 mark. The White House Press Secretary Jay Carney stated, There were over 7million visitors to the website in the first two days alone, and yet less than 30,000 of a 500,000 estimated enrollees actually enrolled. I, as a supporter of the ACA, can feel pain and guilt of supporting it. Another issue is whats being called the 49er effect. In basic terms the ACA is imposing different requirements for businesses who employee 50 or more people. At that point small business owners have to, by law, provide healthcare or pay a penalty. In a nut shell its pointed out that those who are close to the 49 mark will either lay-off employees or cut hours to less than 50 equivalent full-time hour employees and its already happening. The only other

Fullbright 3 option is to pay a penalty which could be less than providing health coverage. Journal Reports on a recent survey reveals, The "49er" effect is very real. These are businesses that will cap their full-time payroll workforce at 49 employees to avoid ObamaCare's insurance mandate for companies with more than 50 full-time equivalent workers. Of firms with between 40 and 70 employees, a little over half say they are likely to "make personnel decisions to keep" their "workforce below the threshold of 50 full-time employees and avoid the requirements and penalties associated with the new health care law. Here is what I understand after reading some FAQs about employer responsibilities from the Healthcare.gov website. The ACA requires certain employers with at least 50 full-time employees, based on an equivalent number of hours worked (30 hours is considered full-time), to offer health insurance coverage that meets certain minimum standards set by the Affordable Care Act or to make a tax payment called the Employer Shared Responsibility Payment or ESRP. The ESRP requires employers to pay up to 35% of an employees healthcare cost or they pay a penalty. The 35% only comes in when an employee pays more than 9.5% out of pocket for that healthcare. At $750 per person in fines per year it may be in the businesses best interest financially may be just to pay the fine or downsize its workforce. Well after just a little bit of research, the negative publicity, and the backlash from the failed launch of the Healthcare.gov website, as a supporter of the ACA, I feel some pain and guilt of supporting it. Its obviously not perfect. Here is why I still feel positive about the ACA, over the past 15 years or so the rampant rise in healthcare coverage has all but forced change in the system. The ACA is that change and The Wall Street

Fullbright 4 we are stuck with it. We might as well make the best of it. A report written by the Small Business Majority in 2009 called, The Economic Impact of Healthcare Reform on Small Business, gives some great information on the road we were traveling and the steps that need to be made to go in a better direction. According to the report, Small businesses paid more than $153 billion on employee healthcare benefits in 2009. From there, small business annual spending on healthcare will more than double over ten years to $339 billion in 2018. With that kind of cost the economy will suffer because of the greater percentage of profits businesses have to invest in healthcare rather than into their own companies. Does $52.1 billion sound like a lot? With reform that number is almost cut in half to an estimated $29.2 billion and trends to continue to save even more past 2018. Thats incredibly promising to me. Any kind of investment in change with a return in lower cost and better quality coverage that substantial is a plus. Its also over a long sustained period of time that can be built upon. Another great point is that businesses that havent been able to offer healthcare coverage to their full time employees now can. A tax credit programs provided by the ACA gives companies a maximum of $50,000 based on number of employees and profit margin. Key Findings from the Small Business Majoritys report also finds that 19.3 million employed American were eligible for a tax credit in 2011. So they paid very low rates and got the coverage they needed. The total tax credits available to small businesses with fewer than 25 full-time workers in 2011 was approximately $15.4 billion. That averages out to about $800 per employee. Thats huge for business and the economy. Not only do people get the healthcare they need businesses can better afford it with minimal extra cost. The underlying kicker to this is that struggling hospitals around the country can get paid for their services regularly which will drive down healthcare cost, this in turn will compound the effects of the market place and drive down premiums exponentially. Hospitals that are now getting

Fullbright 5 regular insurance payments can offer better health services as well with better up to date equipment because they will start to see profits instead of contracting out collection agencies. So not only do more people get coverage but the effects trickle down into the service side of healthcare and they can offer it with higher quality. Thats a win-win-win situation in the making. There are a couple of things we could try to fix some of the issue. The Wall Street Journal states a very interesting idea, One fix that might mitigate some of these negative employment effects would be to pass a law proposed by Senators Joe Donnelly (D., Ind.) and Susan Collins (R., Maine) to change ObamaCare's definition of a full-time job to 40 from 30 hours a week. Better still would be for Congress to repeal the law and pass a business and worker-friendly healthcare reform. Thats makes a lot of sense to me, by raising the full-time standards by an actual relatable number. Who in the real world considers anything below 40 hours full-time anyway? This will widen the gap between continuing coverage and paying a fine and protect peoples livelihood and get more people covered. Another good Idea we could try is why not just split the inner workings of the ACA into two separate entities under the same law? We can give a board of competent legislators the power to manage individuals and families alone on one side and another board of competent legislators the small business side. A chairman can be voted in by congress for each side and then a cabinet of advisors and economist can help keep the system running smoothly and issues can be resolved in a more efficient way. The Healthcare.gov website can use a serious revamp for sure. I think the biggest thing that went wrong is we simply

Fullbright 6 used the wrong contractor for the job. For $600 million why couldnt we have had Apple or Microsoft which are very reputable companies for example have the contract? They dont need the money they are extremely successful in the private sector. I think It would have been a lot better to give a substantial contract to a well-known company with something or loose over something to prove any day of the week. This ultimately gives them more credibility before they do the job as well as holds them more accountable if something doesnt work like its supposed to. Apple for example has an extremely broad platform to implement just another application to their system, a system that has worked for many years now. Even Microsoft, Apples nearest competitor has same sort of credentials and theyve been doing it longer. Another great way to alleviate some confusion about the subject is to do a little research or ask questions. Dont trust the news reports about the opinions people have, make your own educated one. A little bit of knowledge goes a long way for both sides of the fence. Those that support will realize its not a perfect system and those against it will realize between the private system we were using and the new ACA, the ACA is the lesser evil by far. A change is needed and until someone comes up with a better idea, lets give the Affordable Care Act a good fighting chance to make things better.

Fullbright 7 Works Cited

Harbage, Peter, and Hilary Haycock. "The Economic Impact of Healthcare Reform on Small Business." Full Report: National Study Findings. 1.1 (2009): 7-8. Web. 22 Nov. 2013. <http://www.smallbusinessmajority.org/pdfs/SBM-economic_impact_061009.pdf>.

"Small Business and ObamaCare; A New Survey shows that Employers Will Drop Coverage and Cut Hours." Wall Street Journal (Online)Nov 12 2013. ProQuest. Web. 14 Nov. 2013 .

"The Affordable Care Act Increases Choice and." The Affordable Care Act Increases Choice and. The White House, n. d. Web. 23 Nov. 2013. <http://www.whitehouse.gov/files/documents/health_reform_for_small_businesses.pdf>.

United States Federal. U.S. Centers for Medicare & Medicaid . Small Business. Baltimore: U.S. Centers for Medicare & Medicaid Services, 2013. Print. <https://www.healthcare.gov/small-businesses/>.