Although the energy that charged the Republican led government to prioritize the repeal and replacement of the Affordable Care Act (ACA) has been met with more questions than answers, make no mistake: change is on its way.
For many small business owners, this is welcomed change. During the policy formation process of the ACA, small business advocacy organizations, associations, and small business owners themselves felt excluded from the process. The result of which was not only a deep-seated skepticism of the law, but legitimate concerns that the law did not do enough to address their needs. The energy and unknown surrounding the future of the law is an opportunity for these small business stakeholders to make their voices heard and gain a long-awaited seat at the table in a way forward.
On February 7th, the House Small Business Committee led a hearing to do just that calling upon health policy experts, the National Small Business Association (NSBA), The National Association for the Self Employed (NASE), and the National Federation of Independent Business (NFIB). The conclusions from the hearing clearly stated what small businesses want from the new administration: affordability, flexibility, and predictability of health care and coverage.
Cost remains the top cited reason why small businesses do not offer health coverage to their employees. This was true before the ACA, during the implementation of ACA, and now years after it. This unwavering historical truth points to the looming problem the ACA and the insurance market itself stepped away from addressing: if America’s health care delivery system through an employer is both efficient and effective means to covering the population, we are ignoring the largest source of employment to reach this goal.
In its current state, major medical small group plans are far from an attainable reality for the majority of small businesses. Per the NFIB, of the 60% of small businesses not offering health coverage to their employees, 52% said the cost of coverage itself was the deciding factor. This coupled with the cost of complying with coverage legislation, like the ACA, makes offering the benefit all the more unattractive.
If the industry really wants to move the needle on small group health insurance, this is the sticking point: make coverage options more affordable to the small businesses owner, and give them additional cost saving options, or less volatility in year over year premiums, to sustain it.
Make no mistake, the ACA has effectively covered more American’s than ever before, reduced coverage discrimination, worked towards stabilizing health care costs, spurred industry innovation, and placed regulatory guardrails enhancing the quality of health coverage. Yet much, if not most, of these positives directly benefited those in the individual market, a market that small businesses have been inhibited in taking advantage of.
What small businesses are looking for are a better way of taking advantage of the individual market for their employees. Per the NFIB, in 2015, 16% of small businesses attempted to do just that by helping pay for individual plans of their employees, and under the ACA, were penalized for it. Additionally, little was done to assist those contracted or self-employed benefit from the tax advantages of employer sponsored insurance. This compounded with the regulatory compliance headache left many small businesses wavering in the new health insurance landscape.
Flexibility, as small business stakeholders see it, comes as innovation in the insurance market. New models for cost-sharing, like Section 18001 of the 21st Century Cures Act’s approach to HRA’s was cited as a direct example of this, with hopes of more to come.
Another side effect of what many small business owners viewed as convoluted legislation was confusion. Per the NSBA, 14% of small business owners spend more than 20 hours a month on federal regulations, noting the ACA as one of the most burdensome. Many were left feeling not only unsure of their compliance with the law, but also unsure of how to take advantage of it. The Small Business Tax Credit was one such example that small businesses felt was not simple nor broad enough to take full advantage of.
The confusion for small businesses owners was not aided in the fact that their current health plans were being “grandfathered,” their premiums were still greatly rising now along with deductibles, and they were unable to gain transparency into health care costs for themselves and their employees. This uncertainty stifled the growth in the small group market despite the ACA’s opposing intention with the inclusion of SHOP, the small business tax credit, and leaving small businesses without a coverage mandate.
For the small business owner, predictability comes in two forms: increased transparency to health care costs year over year and less convoluted legislation.
By prioritizing affordability, flexibility, and predictability of health care and coverage, small business are looking to be part of the solution in reducing the current barriers preventing mass entry into the health insurance market. And it looks like the new administration is listening.