Small Businesses Suffering Under Obamacare
Consumer Power Report #491 Since the Affordable Care Act (ACA) became law in 2010, millions of Americans have been forced to obtain a new, often inferior health insurance plan; health insurance premiums have risen dramatically, especially for young
Consumer Power Report #491
Since the Affordable Care Act (ACA) became law in 2010, millions of Americans have been forced to obtain a new, often inferior health insurance plan; health insurance premiums have risen dramatically, especially for young adults; and many health insurance companies operating in the Obamacare exchanges have lost millions of dollars. For instance, UnitedHealth Group, the nation’s largest health insurer, recently announced it is expecting losses totaling more than $500 million on its 2016 Obamacare plans.
Although numerous groups are facing difficulties related to ACA, few are struggling as significantly as U.S. small businesses. According to an online survey produced by LevelFunded Health, a national health insurance agency “with a hyper-focus on Affordable Care Act ‘alternative’ employee benefit programs for the small employer market segment,” 87 percent of those small businesses who offer “group health care” saw health insurance premiums rise by 25 percent since 2014, with 12 percent seeing premium increases of 50 percent or more.
Small businesses are at a significant disadvantage when competing against larger businesses because the latter can more easily absorb higher health insurance costs. This has led numerous small businesses to cancel their health insurance benefits completely, dumping an unknown number of employees into Obamacare exchanges. This is not only bad for the employees, it’s horrible for the businesses, who are now losing quality job applicants to large corporations that offer better benefits, according to the LevelFunded Health (LFH) poll.
The survey found 56 percent of the 2,500 small businesses polled say they are losing quality employee candidates because of the rising costs associated with employer-provided health care plans under Obamacare.
“Small businesses must already compete for business and market share with large corporations, now they must also try to mimic their offered health benefits in order to attract the top candidates in the job market,” said LFH CEO Russ Carpel in a press release.
Written into the Affordable Care Act legislation was a provision to establish the Small Business Health Options Program (SHOP) marketplace, which ACA proponents said would help small businesses compete with larger employers. In November 2015, Kaiser Health News reported, “Employers with fewer than 50 full-time workers are eligible to buy coverage on SHOP. The federal government even offers businesses an incentive, a tax credit worth up to half of an employer’s share of their workers’ premiums. Among the conditions: The firm must employ fewer than 25 workers and their average salary cannot exceed $50,000.”
According to the Kaiser Health News story, only 85,000 people from 11,000 small businesses had coverage through SHOP. This is significantly less than the 1 million people the Congressional Budget Office expected to be enrolled in SHOP by the end of 2015.
The failure of ACA, and SHOP specifically, to provide small businesses with cost-effective health insurance options for their employees is not only causing small businesses to lose quality employees or potential employees to larger companies, it’s forcing small businesses to choose between offering health insurance for employees or keeping prices reasonable for their customers.
Further, many small businesses who meet or surpass the 50-full-time-employee threshold but don’t provide health insurance are required to pay an “Employer Shared Responsibility” fine, according to HealthCare.gov: “Some employers with 50 or more [full-time] employees who don’t offer insurance, or whose offer of coverage is not affordable or doesn’t meet certain minimum standards, are subject to Employer Shared Responsibility provisions. They may owe a payment if at least one of their full-time employees enrolls in a plan through the Health Insurance Marketplace and receives a premium tax credit.”
Susan Wilson Solovic, a New York Times bestselling author and former ABC News business analyst, says to avoid any potential penalties associated with the 50-employee rule, small businesses are choosing to outsource many of their jobs to online freelancers, rather than hiring more staff.
Writing for The Huffington Post earlier in January, Solovic says one of the top 10 trends for small businesses in 2016 will be the continued use of this strategy: “Wanting to keep head count low for profitability and to stay under 50 employees due to the requirements of the Affordable Care Act, small business owners will turn to the Internet to use the services of online freelancers.”
Prior to 2016, many of the time-consuming regulations for small businesses with fewer than 100 employees but more than 49 employees were not enforced in order to give businesses more time to prepare for the rules. Now that many small businesses are going to be forced to comply with myriad health care rules and regulations they have been able to avoid in the past, many experts are expecting the number of Department of Labor audits to increase, adding to the growing confusion and costs being imposed on small businesses.
In an article published in U.S. News and World Report by Donna Fuscaldo, payroll services expert Steve Jackson, senior vice president of strategic development and channel sales at PrimePay, said, “Employers are seeing more audits because they are not disclosing appropriately or maintaining documentation. We’ve seen a 300 percent increase year-over-year in the number of Department of Labor audits, and we fully expect to see an increase in audits into 2016.”
More regulations, additional costs, the possibility of fines, an increasing risk of being audited, and greater difficulty competing with larger companies for quality employees are just some of the many new challenges facing small businesses today in the new Obamacare-dominated business environment.
-- Justin Haskins
IN THIS ISSUE:
Emergency rooms are health care’s front line – in the United States, nearly 45 out of 100 people visit an ER in any given year. But there’s an issue brewing behind the scenes in emergency medical facilities, one that can’t be fixed by a simple stitch or bandage. A new study published in the journal Academic Emergency Medicine shows that drug shortages in ERs across the United States increased by more than 400 percent between 2001 and 2014.
The study analyzed data from the University of Utah Drug Information Service, which receives drug shortage reports submitted through a public site administered by the American Society of Health-System Pharmacists. Two practicing emergency room physicians assessed whether the reported shortages had to do with drugs used in ERs, then looked at whether they were associated with lifesaving or acute conditions.
Of the nearly 1,800 drug shortages reported between 2001 and 2014, nearly 34 percent were used in emergency rooms. More than half (52.6 percent) of all reported shortages were of lifesaving drugs, and 10 percent of shortages affected drugs with no substitute. The most common drugs on shortage are used to treat infectious diseases, relieve pain, and treat patients who have been poisoned. Though the number of shortages fell between 2002 and 2007, they’ve risen by 435 percent between 2008 and 2014.
Vermont Governor Peter Shumlin announced the state wants to transform its health care system under the All Payer Model.
According to the governor’s office, the All Payer Model rewards fee-for-service and quality-based care that focuses on keeping Vermonters healthy.
The model changes three main payers of healthcare in Vermont including Medicaid, Medicare, and private insurance, to pay doctors and hospitals differently than they do today.
The governor’s office says instead of paying for each test or procedure, doctors and hospitals will receive a set of payment for each patient attributed to them.
“For Vermonters, our innovation will mean not only a health care system that is more affordable but one that better meets their needs,” Gov. Shumlin said. “We will restore the family physician’s rightful place in Vermonters lives, ensuring they have someone to turn to when they get sick and a partner in keeping them healthy.”
Vermonters will still be able to see the doctor or healthcare provider of their choice. Vermonters on Medicaid and Medicare will not see any changes to their benefits.
The state is currently finalizing negotiations of the terms of the All Payer Model with the federal government. If approved, Vermont will become the first state to adopt this model.
A federal appeals court has upheld Virginia’s Certificate of Public Need law despite arguments from two doctors who allege the statute is unconstitutional.
The 4th U.S. Circuit Court of Appeals on Thursday upheld a lower court’s ruling in a challenge to the law, which requires owners and sponsors of many medical-care facility projects to prove public need for their endeavors and gain approval for them.
Thirty-six states have CON laws, according to the National Conference of State Legislatures. The laws have been the subject of intense debate for decades. The laws’ opponents say they hinder competition, leading to higher prices and lower quality. Hospital associations defend the laws as necessary to help financially protect hospitals that provide charity care.
The doctors behind the Virginia case alleged that the state’s law violated the U.S. Constitution by making it difficult for out-of-state providers to enter the state.
A three judge panel, however, rejected that argument. In the opinion, Judge Harvie Wilkinson, also wrote that it shouldn’t be up to courts to judge the overall value of CON laws. Rather, state legislatures should grapple with the issue.
Despite years of discussing the issue without resolution, Utah lawmakers will again take on Medicaid expansion and various plans to implement it for the thousands of Utahns who remain uncovered by health insurance.
And, while some lawmakers are taking approaches that have been tried before, others are trying new things – an indication of a potential desire to bring health care benefits closer to Utahns who can’t afford them.
“We’re moving slowly in the direction of getting it. It’s frustrating how long it takes, but I believe we’re moving in that direction,” said Rep. Ray Ward, R-Bountiful, who is backing a bill (HB18) with an underlying concept similar to that of UtahAccess+, which failed to gain favor of the house majority and never made it before the whole body for consideration last summer.
There are nearly 70,000 Utahns in the coverage gap – earning too much to qualify for existing Medicaid coverage, but not enough to qualify for subsidized health insurance through the Affordable Care Act’s federal marketplace. The majority of them have no option for health care and usually end up looking for help in the emergency room, with insured Utahns making up for those costs.
Ward wants health coverage options for every Utahn in the coverage gap, up to 138 percent of the federal poverty level, seeking waivers to get there and then pay for it with a hospital assessment and a new tax on e-cigarettes.
“My bill is what I want and what I feel would be best for this state,” Ward said.
SOURCE: By Wendy Leonard, Deseret News