With insurance premium increases on the horizon, states and small businesses address Obamacare’s challenges.
Sixty-five percent of small
businesses will see their health insurance premiums increase under the Affordable
Care Act, according to a federal actuarial report conducted by the Centers for
Medicare and Medicaid Services and published in February 2014.
It will increase due to a
section of the ACA that prevents insurance companies from pricing policies
according to health status and limits the price differential by age, according
to the report.
“The recent report from the
Obama Administration confirms what many small business owners already knew,”
says Kevin Kuhlman, manager of legislative affairs at NFIB. “Increased requirements
and mandates combined with new taxes and fees on small business health
insurance products necessarily lead to higher costs.”
The report did not give an
estimate for how much of an increase small business owners can expect, and
Kuhlman says that the experiences will vary by state and insurance provider.
States Address Insurance Plan Changes
So far, many small business
owners have been able to avoid, or delay, more significant premium increases
associated with the ACA by taking advantage of early renewal options for their 2013
health plans. Some states likely will allow continued extensions beyond 2014, and
Kuhlman suspects many more small business owners will take advantage.
State lawmakers, however, are
still considering whether to extend noncompliant plans and how long to extend them.
Kuhlman estimates that in states that allow continued extensions, small
business owners may be able to delay more significant ACA-related premium hikes
for an additional one to three years. But it will take several months before
the dust settles and we learn where each state stands.
Small Business Seeks Relief From the ACA’s Harmful
In the meantime, Kuhlman
says, small business owners can and should lobby their federal legislators for
relief from the ACA. Specifically, they should advocate for repeal of the small
business health insurance tax and repeal of the employer mandate, the most
controversial requirement that already has been delayed twice as a result of
“Eliminating the employer
mandate would relieve midsize business owners from the uncertainty that
accompanies it,” Kuhlman says. “It would also eliminate the burdensome
reporting requirements associated with the mandate in future tax filing
Furthermore, according to a
recent study from the nonpartisan Robert Wood Johnson Foundation, eliminating
the mandate would not have a significant impact on overall insurance coverage,
contrary to mandate supporters’ claims. Under the mandate, a projected 251.1
million people would have health insurance; if it were repealed, a projected
250.9 million would have insurance, a difference of only 200,000. A repeal
would, however, mean a loss of approximately $130 billion in penalty payments that
fund the ACA.
To find the best solution for
your small business, Kuhlman recommends consulting with tax and insurance
specialists about all insurance options. Learn more by visiting www.nfib.com/healthcare.