Whether or not Republicans eventually succeed in repealing and replacing the Affordable Care Act (ACA), it is increasingly obvious that the debate over the future of healthcare is creating so much uncertainty that irreparable damage may have already been done to the ACA. And even if the Republican replacement for the ACA, known as the American Health Care Act (AHCA), does become law it might end some of the uncertainty but it won’t bring any relief as 23 million Americans would lose their health coverage by 2026, while 54 million people would experience market destabilization through skyrocketing rates in some regions. This will have a catastrophic effect on our economy as a whole and severely damage small businesses that already face higher insurance costs than their big business counterparts.
The AHCA may not be law, but it is already undermining the ACA. As Jon Healey noted in a column for the Los Angeles Times, Anthem Inc.’s decision to exit the ACA marketplace in Ohio will leave at least 18 counties without a marketplace choice. As a result, 13,000 people are expected to lose their insurance. That may not sound like a large number, but many of those uninsured people could be self-employed entrepreneurs dependant on non-group plans. In fact, 1 in 5 people who purchased health insurance through an ACA marketplace in 2014 was a small business owner, self-employed or both, according to a report released by the U.S. Treasury Department and the Department of Health and Human Services.
The consequence of this uncertainty created by lawmakers in Washington, D.C. is equally damaging to small businesses with more than one employee because small firms already pay higher premiums and have fewer health insurance options than their big business counterparts. After all, small businesses are mostly dependent on the small-group market while big businesses usually have the resources to self-insure through health plans they designed for themselves. In fact, before the ACA small businesses paid an average of 18 percent more for health coverage than large businesses and received less comprehensive coverage. Small employers also saw annual premiums increase by more than 10 percent on average from 2008-2010, but that rate dropped by half from 2011-2015, according to the Centers for Medicare and Medicaid Services (CMS). With proposed changes to insurance regulation already worrying insurance providers to the point that premiums will likely increase, it is hard to imagine the AHCA providing small businesses with the kind of small-group market savings they have seen under the ACA.
If marketplace uncertainty ultimately creates higher premiums and fewer health insurance options for small businesses, it will have a clear and devastating result: employers will either shift costs onto their employees or drop coverage completely.
The other major detriment to small businesses that could result from the AHCA may have nothing to do with whether or not markets are stable and small employers can afford coverage. It may ultimately come from the harm the AHCA does to the people who shop at small businesses. If policymakers are going to play a game of chicken with 20 percent of our economy by causing premiums to skyrocket for tens of millions of people, and causing tens of millions more to lose their insurance entirely, it’s reasonable to assume those people will have less money to spend at local small businesses.
Rather than repealing and replacing the ACA, it must be strengthened. Otherwise, America’s job creators may not be around to actually create America’s jobs.