As a recent New Yorker magazine analysis concluded, it comes as some surprise to learn that Obamacare may well be the best thing Washington has done for American small business in decades.
By STEPHENE MOORE
Special to The Star
Unfortunately, many who stand to benefit from the new law must wade through the distractions and fearmongering from those rooting for it to fail.
Take for example Steve Roses Nov. 10 column in these pages, which is heavy on fear, yet light on facts.
Mr. Rose writes that his businesss private insurance rates will rise 11.6 percent this summer and that 3.75 percent of this rise will be attributed to the new health care law. Setting aside for a moment his own admission that most of this rate increase has absolutely nothing to do with the new law, his arguments are faulty. For example: he notes that his rates are currently based on his employees health status gender, age, type of company and location What he neglects to mention is that were any of his employees to get sick or disabled, or if he were to hire new employees who happen to be women, his rates could increase exponentially.
The new community rating system he professes to fear so greatly, will actually be a great asset: no longer will a lone employees sudden illness (or the illness of a family member) lead to an astronomical rise in everybodys rates. And small businesses will be able to pool their risk and with it their bargaining power in order to get lower rates and better coverage for their employees.
The truth of the matter is that before the Affordable Care Act, small businesses didnt have the bargaining power of large businesses and they paid through the teeth because of it. Between 1999 and 2009 annual family premiums for small business employees grew a whopping 123 percent from $5,700 to $12,700 a year.
Even if just one employee got sick, it would often impact everyones premiums.
Its no surprise that small business premiums were 18 percent higher on average than the premiums paid by big business (not to mention the administrative and set-up costs, which also tended to run higher).
The Affordable Care Act also has another, important mechanism to make it more affordable for small business to cover their employees: tax credits. In fact, many are already benefiting from a new tax credit worth up to 35 percent of their premium contribution. Next year, the maximum tax credit will be worth up to 50 percent of some employers contributions to employees premium costs.
Small businesses also benefit from provisions in the new law designed to rein in excessive price increases. Insurers selling to small businesses must now justify double-digit rate increases (the proportion of double-digit rate increases proposed by insurance companies dropped from 75 percent in 2010 to 14 percent at the start of 2013). And they generally must provide rebates if they spend less than 80 percent of customers premiums on actual care (rather than things like CEO salaries or advertising).
When you clear away the demagoguery and arguments being made by the laws opponents, its clear that the Affordable Care Act is great for business, and great for consumers.
It helps small businesses bottom lines, and its a lifeline for families who need affordable health care. Its time to replace fear with facts.
Stephene Moore of Lenexa is the regional director of the U.S. Department of Health and Human Services, based in Kansas City.