It's been two years since consumers were first able to purchase health insurance through state- or federal-run exchanges. And while the massive health care law has withstood two Supreme Court challenges and countless congressional efforts to overturn the legislation, its diagnosis has been mixed--particularly among U.S. small businesses.
For Laurie Olsen, the owner and president of A Stars & Stripes Flag Corporation, an online retailer of national flags, the Affordable Care Act held out a lot of promise.
She hoped it would offer her and her family an affordable insurance plan, after watching premiums rise for years. By the health law's rollout, which officially began in October 2013, her health care costs were $8,000 annually, for a Blue Cross Blue Shield plan that covered her husband and daughter. The deductible was $2,500. Like many middle-class Americans, she assumed the health care overhaul would give her access to affordable care through Illinois's state-run exchange.
Instead, her costs have gone up nearly 30 percent in the past year alone, and she now pays $10,000 for a high-deductible plan that covers less of her health care needs than in prior years, Olsen says. A Stars and Stripes Flag Corporation has annual revenue of $400,000, and Olsen operates with the help of one part-time employee. It's based in Downers Grove, Illinois.
"I was hoping one group of people that would have benefited from the program was micro-businesses like mine," Olsen says. "But the ACA does not really benefit us."
Since its passage in 2010, the health care law has undoubtedly helped consumers, with 11 million additional people getting coverage in the past two years, mostly through an expansion of Medicaid. However, the case for the broad base of small businesses has not been made, says health care economist Chad Meyerhoefer, an associate professor at Lehigh University's College of Business and Economics.
Many small businesses have definitely benefited from a temporary tax credit that allows some companies with fewer than 25 employees to write off 50 percent of the cost of their premiums. (The credit expires on January 1, 2016.)
Other businesses have also benefited from new regulations that prevent insurers from denying coverage based on preexisting conditions. One such entrepreneur is Vivek Puri, president and founder of Classic Homes, a luxury homebuilder in Woodbridge, Virginia. The company has 20 employees, 11 of whom currently take advantage of the company's Gold health care plan.
Prior to the ACA rollout, four of his workers needed surgeries for back, knee, and leg ailments, as well as treatment for a neurological illness. When Puri went to secure coverage in 2012, two insurance companies refused to take on his company. One insurance company wanted to hike his annual insurance costs, which were then around $27,000, by 140 percent. Following the rollout of the health care act, however, Puri was able to find a group plan for his business for $37,000, including coverage for two new employees.
"If the ACA had not gone into effect, it would have made it impossible to provide insurance to my employees," Puri says.
And while reining in runaway costs of coverage was a key objective of the law, it's too soon to tell if the rate of premium increases will stay at their current low level, Meyerhoefer says. For 2015, the average premium for employer-sponsored family coverage for firms with fewer than 200 employees increased 5 percent to $16,625, according to the 2015 Employer Health Benefits Survey, put out by the Kaiser Family Foundation. That compares with an 8 percent increase for family coverage in 2012, and a 6.4 percent increase in 2011.
One factor keeping premiums down is the financial crisis, which reduced overall demand for health care policies, Meyerhoefer says. "There has been some reduction in health care cost growth, but at this point we don’t really know how much is due to the ACA coinciding with the recession, and people spending less," he says.
To be sure, the full impact of the landmark health care law won't be felt for at least two more years. Businesses with 50 employees or more are required to offer qualified health care plans in 2016. (They may be assisted by the federal exchange for small businesses looking for group plans, called Small Business Health Care Options Program, or SHOP. The exchange opened this year for businesses with fewer than 50 employees. In 2016, SHOP opens for businesses that have up to 100 employees.)
Still, plenty of businesses already have a lot of experience with the exchanges. Even though companies with fewer than 50 employees aren't required to offer qualified health care plans, the majority of them say they need to offer benefits to compete with larger companies. And companies with 100 employees or more, which must now comply with the ACA, are clearly confounded by the volume of paperwork required to adhere to the law, says Jeff Plakans, founder and president of payroll and benefits management company Commonwealth Payroll & HR, in Marblehead, Massachusetts. Commonwealth itself is a small business, with 15 employees.
Among the things that such firms must make determinations about and document, Plakans says, is if they qualify as exempt employers, whether their workers are considered full-time employees, and if so, whether the plans they offer adhere to the cost formulas prescribed by the government.
When the 50 full-time employee mandate goes into effect next year, Plakans says, he expects to see a lot more exasperation from business owners.
"One thing that we are seeing from a lot of employers is that they just want to be rid of this, they don't want to own the responsibility around it, and they want to hand it off to someone else," Plakans says.