It is undeniable that assaults on the Affordable Care Act (ACA) will soon lead to massive spikes in health-care premiums, an outcome that will devastate America’s small businesses.
A recent analysis by California’s ACA marketplace, Covered California, estimates premiums would increase anywhere from 35 to 94 percent over the next three years mainly because Congress chose to eliminate the ACA’s individual mandate.
When these forecasts come true, it will be particularly harmful for small firms and self-employed business owners. After all, more than 3.7 million small-business employees are enrolled in the ACA marketplaces, and more than six in 10 ACA marketplace enrollees are small-business owners, self-employed or small-business employees.
Congress is aware that something needs to be done to stabilize the ACA marketplaces, which is why it is absolutely critical that lawmakers take steps to do so as part of legislation that would keep the federal government funded beyond March 23.
The basis for stabilization legislation that could make its way into the spending package will likely come from a stalled 2017 bipartisan proposal known as Alexander-Murray after the bill’s primary sponsors, Sen. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.).
The primary goal of Alexander-Murray is to restore for two years cost-sharing reduction (CSR) payments that President Trump proposed eliminating in 2017. CSR payments go toward reducing out-of-pocket costs for nearly six million lower-income people.
The government pays for this assistance under the ACA by reimbursing insurers in exchange for them lowering deductibles and other out-of-pocket costs for low- and middle-income families.
Another bipartisan proposal that might make its way into a larger spending bill and could help lower health-care costs for individuals is sponsored by Sen. Susan Collins (R-Maine) and Sen. Bill Nelson (D-Fla.).
Their legislation would provide a total of $4.5 billion in federal reinsurance funding for 2018 and 2019 in order to help lower insurance premiums by compensating insurers for their costliest patients.
Significantly, this money would help mitigate the 10-percent increase in premiums projected by the Congressional Budget Office as a result of the new tax law, which is expected to cause a drop in marketplace participation because it repealed the ACA’s individual mandate penalty.
Other options being considered to stabilize the marketplaces are a boost for employer-sponsored health savings accounts (HSAs) by allowing HSA dollars to be used for wellness benefits, including exercise. Still another plan would restore some funding for ACA marketplace outreach and enrollment, after that funding was slashed by the Trump administration in 2017.
Overall, these bipartisan approaches are a great start. While there are some concerns with portions of the bills on the table, such as Alexander-Murray allowing states greater flexibility to skirt key provisions of the ACA, if lawmakers proceed with caution they have a real opportunity to take essential steps toward stabilizing the ACA marketplaces.
If nothing is done, however, the future for small businesses is grim. Premiums could become so high that many small business employees would be unable to access coverage, while solo entrepreneurs will be forced to go work for someone else just so they can access affordable health benefits.
If we truly value entrepreneurship, we will not let this happen.
John Arensmeyer is a former small business owner and the founder and CEO of the Small Business Majority, a small business advocacy organization that supported the enactment of the Affordable Care Act.