The Future of Healthcare and Small Businesses

When analyzing the effects of the Affordable Care Act (ACA) on small businesses in light of the status quo and general trends of the health insurance market, it seems unlikely that the bill will turn out to be the job-killer or enemy of small business it was predicted to be. Although insurance premiums and deductibles are likely to rise, they have not had detrimental effects on economic growth in recent years. Ex-Congressional Budget Office (CBO) Head Douglas Elmendorf, who chaired the office until 2015, said in an interview with the Bloomberg Bureau of National Affairs (BNA) that the “ACA has not seen the kinds of increased costs and disruptions in the insurance market that critics had feared.” [1]

What is the outlook of Obamacare in 2016?

In 2016, small businesses that employ between 50 and 99 FTE employees will finally be subjected to the burden of the ACA’s employer mandates. Previously these firms were exempted from the mandate because of a transitional relief period offered to small businesses.However, starting in 2016 and onwards, more small business owners will have to figure out how to provide insurance to all of its full-time employees, and their dependents. [2] So while the insidious effects of the ACA on small businesses might have been concealed due to transitional reliefs and penalty delays, future years promise concrete data points on small business deaths, births, hiring, and firing practices that can be used for further analysis and policy evaluation.

Still even more uncertain is the future of the ACA itself. While 2016 Democratic Presidential Nominee Hillary Clinton vows to defend the ACA, strengthen its benefits, and minimize any detrimental effect on small business, [3] Republican Candidate Donald Trump vehemently opposes the act, stating that he will request a congressional repeal of the Obamacare on his first day in office. [4]

The CBO and JCT forecasted that repealing the ACA would increase the number of uninsured non-elderly people by about 19 million in 2016 and by roughly 24 million in “all subsequent years through 2025, compared with the number who are projected to be uninsured under the ACA.” This amounts to an average annual increase of approximately 8 million, with coverage purchased individually or obtained through Medicaid falling by between 30 and 32 million. [5]

In an interview with Bloomberg BNA, ex-CBO chief Douglas Elmendorf ,when asked about repealing the ACA, claimed that “there are no alternatives to the Affordable Care Act that are on the table with independent, reputable estimates of their effects on insurance coverage and the federal budget.” [6]

If the answer is not to repeal, then how can we reform?

One alternative to push back against the trend of rising premiums is to increase competition and choice in the insurance provider market. Premium increases vary between states, but some Americans are witnessing “insurers exit the health exchange marketplace, limiting choice, and as a result, boosting premiums” even more than others, depending on their state of residence. [7] The CBO has found that premiums tend to be lower in markets with more insurers, hospitals, and physicians. This might seem obvious as insurers would be forced to lower rates to win over enrollees and remain competitive in a market with more suppliers; coupled with an increase in the supply of physicians and hospitals, insurers could negotiate lower payment rates, and as a result, offer lower premiums! However, while it may seem like obvious economics to increase competition among insurers, the CBO warns that “efforts to reduce increase competition among insurers, like other effort to reduce insurance premiums” might produce “complex effects”, as most insurance, hospital care, and physicians’ services markets are already quite concentrated. [8]

The Election and Healthcare

According to the Centers for Disease Control and Prevention’s National Center for Health Statistics, the proportion of uninsured Americans dropped below ten percent in 2015 for the first time in history. [9] While proponents of the Affordable Care Act could argue that this statistic serves as a defense of the act in of itself, its opponents argue that the law explain rising costs in healthcare.

Since its inception, the ACA has taken on a decisive, divisive, and defining role in American politics, markets, and everyday life. Critics of the mandate have complained about its negative effects on small businesses and pointed to the bill as the sole source of increases in premiums. Future executive and congressional leadership will determine the trajectory of healthcare reform in America, and it’s no bewilderment that the controversy surrounding “Obamacare” in American politics has thrust healthcare to the center stage of the 2016 U.S. Presidential Election.

American small business owners and employees need leaders that are willing and prepared to reap the potential benefits of the ACA, while reforming to protect against the detriments of rising premiums. In order to ensure that access to affordable and comprehensive health insurance coverage remains accessible to all citizens, preemptive policy to replace or eliminate the ACA should be avoided.

“Leaders in today's healthcare environment need to draw on all the tools available to them to mobilize their human resources and lead them into the new environment. This is not a time to take a one-size-fits-all approach to management. This is a time to apply the concepts of emotional and behavioral intelligence -- arguably a leader's most valuable tool set with which to overcome the most profound challenge of this times.” [Delmatoff, J., & Lazarus, I. R., F.A.C.H.E. (2014). The most effective leadership style for the new landscape of healthcare. Journal of Healthcare Management, 59(4), 245-9.]