The Affordable Care Act was put in place to make health care more affordable, accessible and of higher quality. Implementation will run the course of many years, and has experienced some technological setbacks, but Obamacare is not going away.
As a health care consultant and Certified Application Counselor for the Affordable Care Act, it continues to surprise me when I see politicians, news reporters and respected consultants propagate concerns that the ACA will not fulfill its intended purpose, and instead will be bad for business and bad for communities. These opinions and predictions are simply not true. Employers who believe these myths are missing out on much-needed relief from what is becoming one of their largest operating costs.
The truth is that the ACA is going to squeeze some businesses in its quest for improving affordability, accessibility and quality - insurance agencies whose commissions are at stake, and health care providers who have not standardized or publicized their cost structures.
Below are some reality checks for common business-related ACA myths.
MYTH: ACA will raise healthcare costs for small businesses.
REALITY: It is true that health care costs are increasing, and they have been every year to the point that employers cannot absorb the rate hikes much longer. Currently there is no incentive for an insurance agent to right-size a benefits plan for both the business owner and their individual employees. It requires a lot of legwork on the agent's end, and if the plan saves a business money, that means less commission for the agent.
ACA standardizes health coverage by offering five categories of plans available through any participating insurance company. The business owner can control costs by selecting a plan category based on how they want costs to be shared. Or, they can step out of the health plan coordination role altogether by providing employees a set contribution toward their health coverage. This way, the individual employee selects the plan category that best suits the premium and out-of-pocket costs they wish to pay.
Visit the Small Business Health Options Program (SHOP) Marketplace to determine the plans and prices available. All you need to input is your zip code and the ages of employees that would need coverage. Check estimated premium, deductible and out-of-pocket maximums against your agent's options for 2016 and see for yourself. Plans are presented with all of the information you need to compare apples to apples, including summary of benefits, brochures and provider directories.
MYTH: ACA will raise healthcare costs for employees.
REALITY: The existence of this myth alone is a testament to the critical need for employee education of their health care plans. All health plans in the Health Insurance Exchange Marketplace must offer the same 10 essential health benefits, and consumers are now protected from health coverage nightmares they have experienced in the past, such as arbitrary coverage withdrawals, lifetime limits, premium increases without explanation and having to pay for preventive care.
In fact, the ACA system works in our individual best interest. This level of information on plan costs - and in the future provider cost - has never been at our fingertips like it is now. For the first time, a 23-year-old non-smoking individual can review their health coverage and say, if I can get quality health coverage for $170 per month, why is a comparable group plan costing me $420?
MYTH: ACA comes with burdensome tax implications, such as the Cadillac tax.
REALITY: The Cadillac Tax, which will take effect in 2018, is an excise tax that can apply if the health coverage offered to employees will cost them more than stated annual limits. Businesses should see this tax as a benefit, not a burden, since it reduces excess health care spending. In particular, it will prevent taxpayers from shouldering the burden of covering the high end benefit plans of municipalities and school districts as part of a tax bill.
To prevent the Cadillac tax and other tax implications, employers do not need to reduce the amount of coverage they offer - they can simply review their package options and raise their deductibles or switch over to the plans offered through the ACA. Small businesses can further benefit from seeing if they qualify for SHOP Marketplace tax credits, which are worth up to 50 percent of the employee premium contribution.
The overarching reality is that we have always measured healthcare by how much it costs, which is silly when you think about it. Because of the ACA and the Health Insurance Marketplace, we will now be able to measure healthcare on productivity, where the cost of the healthcare plan is relative to the wellness of the workforce. I think I can speak for all business owners when I say we want to focus on keeping our people healthy, productive and accountable for their own health.