The Health Care Solutions Small Businesses Need
This post from small business owners Mike Roach and Nancy Clark originally appeared on Morning Consult.
Republican plans to repeal the Affordable Care Act were like something out of a B horror movie: terrifying at times, very unrealistic and surprisingly difficult to kill. Fortunately for America’s small businesses, conservative lawmakers failed for now to gut the ACA. This development is wonderful news given that small firms like ours struggled with health care costs for years before the ACA led to better health coverage and more choices at lower prices. Now that the health care law is no longer under immediate threat of repeal, it’s time for a bipartisan plan that will strengthen our health care system so America’s small employers can continue to thrive.
Before the ACA drastically increased the accessibility of quality, affordable healthcare, the insurance landscape was bleak for our businesses. Drive Brand Studio, an advertising agency in North Conway, N.H., faced double-digit premium increases every year — sometimes as high as 30 percent. Just one insurance provider was available and coverage was so expensive that the business had to offer its employees a limited plan, which included a $5,000 deductible and covered only catastrophic care. Then the ACA changed all that, and Drive Brand Studio had its pick of four different insurance providers and premiums increased at a modest rate of around 3 percent annually.
Paloma Clothing in Portland, Ore., received similar benefits from the ACA. Thanks to federal income tax credits provided by the healthcare law, it received a tax credit of $4,900 in 2010 and about $5,200 in 2011. By 2015, the credit was up to $8,000. That money was used to help offset the cost of offering employee health insurance, which runs about $30,000 annually for the company.
We’re not alone. Before the ACA, small businesses paid an average of 18 percent more for health coverage than their big business counterparts, and frequently faced double-digit premium increases every year. After the ACA? Small firms saw their premiums rise by just 5.2 percent on average between 2011 and 2015.
As you can see, the ACA represents the first meaningful health care reform for small businesses in decades. That does not mean, however, that we think the law is perfect. If lawmakers really want to help small businesses, we believe they should seriously consider strengthening the ACA in the following ways:
Bolstering the current system of tax credits that has enabled many entrepreneurs to build their businesses without fear that they might lose their health care;
Continuing to expand Medicaid, which under the ACA has already extended coverage to an additional 14 million Americans, including nearly two million small business employees;
Strengthening the small-group market by opposing measures that would allow more businesses to establish association health plans, which would lead to separate risk pools for the healthy and the sick and ultimately drive up costs for small firms with older or less healthy workers;
Limiting cost increases for middle-aged consumers, particularly the rapidly growing group of entrepreneurs between 50 and 64 years old;
Simplifying and expanding the small business tax credit to help more small businesses access affordable coverage; and
Passing health care tax equity for the self-employed so that freelancers can deduct their health care expenses from their FICA tax obligations.
Enacting even just a few of these things would go a long way towards helping small businesses access affordable coverage. These ideas, however, are not just recommendations — they are essential. Much work remains to improve the ACA, and only a bipartisan effort can bring the changes that small firms need. Politicians must accept that they can assist small firms by solving our health care needs, allowing us to focus on what small businesses do best: creating jobs.
Mike Roach is a co-owner of Paloma Clothing in Portland, Ore. Nancy Clark is the owner of Drive Brand Studio in North Conway, N.H. They are both members of Small Business Majority’s Small Business Council.