The Health Care Law will Help Small Businesses

[_Analytics]

For your consideration, a socialist-Marxist-Leninist-anti-Capitalist rag called The Wall Street Journal published the following editorial a couple of days ago.

Small businesses have long faced a predicament with health insurance. The Affordable Care Act helps them solve it.

Many firms want to offer coverage. It's a good way to attract and retain workers, plus owners care about the well-being of their employees. On the other hand, it's costly and complicated, and premiums can vary enormously from year to year, as employees age or become sick.

The Act will help small employers that want to offer insurance, and open up new options for the few that don't.

Steady and Predictable
If a business provides insurance, premiums will be more steady and predictable, thanks to the new law. Insurers won't be able to vary premiums based on an employee's health condition and will have limited ability to do so based on age.

In addition, that business's employees will get a benefit that large-company workers have had for a long time: a choice of plans. Workers can either go with the plan their employer offers or take the money their employer pays for coverage and shop for a different plan on the insurance exchange.

The Act also recognizes that some small businesses would be better off not providing insurance, even after reforms are in place. The money and hassle just won't be worth it.

For firms with fewer than 50 workers, there's no penalty for making that decision. And their workers won't be left without coverage. Thanks to a reformed individual-insurance market, those employees will be able to buy insurance at fair prices and potentially offset the cost with tax credits.

Yes, firms with more than 50 workers must pay for not offering coverage. But instead of thinking of it as a fine, think of it as a choice: You can either offer your employees coverage, or help society pay for that coverage. Businesses are free to weigh the costs and benefits of both options.

What's the Cost?
Opponents argue that the Act will impose burdens on small business. But remember, there's no requirement for firms under 50 employees. For larger firms, the minimum benefits mandated are less rich than what almost all businesses offer today.

As for cost, most estimates of average small-group premiums suggest they will rise only modestly, because of the end of discrimination against sick workers. My estimates for several states find that the effects will be close to zero.

Others who project larger increases typically ignore key factors, such as the competitive insurance exchanges that will drive down premiums and the tax credit that offsets costs for many businesses. They also focus only on the subset of firms that will see premiums rise—ignoring the roughly equal subset that will see them fall.

A Red Herring
The argument that firms will not hire a 50th worker is a red herring. Only 2% of U.S. firms have between 40 and 75 employees, most offer insurance and the ones that don't are unlikely to have hiring decisions driven by this law.

Speaking of growth, let's not forget another important group: entrepreneurs. You might have an idea for a food shop or smartphone app. If you have a pre-existing condition that insurers won't cover, you might never start that business today. But the ACA will provide the insurance security that promotes entrepreneurship tomorrow.

The bottom line is that the Affordable Care Act will bring a leaner and better-functioning market for small businesses. Firms can assess the benefits of offering versus not offering insurance without worrying that they're leaving workers out in the cold. And if they do offer insurance, they'll have cost certainty and new choices.

Dr. Gruber, a professor of economics at the Massachusetts Institute of Technology, was a principal designer of Massachusetts' health-care overhaul and consulted on the Affordable Care Act. He can be reached at reports@wsj.com.

[_cinepro]

For your consideration, a socialist-Marxist-Leninist-anti-Capitalist rag called The Wall Street Journal published the following editorial a couple of days ago.

Small businesses have long faced a predicament with health insurance. The Affordable Care Act helps them solve it.

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The bottom line is that the Affordable Care Act will bring a leaner and better-functioning market for small businesses. Firms can assess the benefits of offering versus not offering insurance without worrying that they're leaving workers out in the cold. And if they do offer insurance, they'll have cost certainty and new choices.

Dr. Gruber, a professor of economics at the Massachusetts Institute of Technology, was a principal designer of Massachusetts' health-care overhaul and consulted on the Affordable Care Act. He can be reached at reports@wsj.com.

That's certainly the best-case scenario. If that's how it works out, great!

[_Elphaba]

This video shows a business owner contend the ACA has made it cheaper for him to provide his employees healthcare.

https://www.youtube.com/watch?v=En6Y4oBqH6o

Elphaba

[_cinepro]

The recent union problems with the ACA are interesting.

http://www.huffingtonpost.com/2013/08/2 ... lp00000003

I'm not sure if I understand their complaint. It sounds like many union members participate in a "Taft-Hartley" health insurance plan that is a joint operation between employers and the unions, which allows employees to work at different companies and maintain their benefits. But the unions are upset that employees in such plans won't be eligible for government subsidies.

Would it work if the Taft-Hartley plans allowed anyone to join (not just union members), and were included in the public exchanges? Are there other reasons the plans don't qualify?

[_Analytics]

The recent union problems with the ACA are interesting.

http://www.huffingtonpost.com/2013/08/2 ... lp00000003

I'm not sure if I understand their complaint. It sounds like many union members participate in a "Taft-Hartley" health insurance plan that is a joint operation between employers and the unions, which allows employees to work at different companies and maintain their benefits. But the unions are upset that employees in such plans won't be eligible for government subsidies.

Would it work if the Taft-Hartley plans allowed anyone to join (not just union members), and were included in the public exchanges? Are there other reasons the plans don't qualify?

I think the idea is that a Taft-Hartley plan entails the employer picking up part of the tab. The idea is that if a construction worker bobs around from job to job, the current company will make the same defined contribution to the plan the worker already receives.

The plan is managed by a board where half of the members represent management and the other half represent the union.

I think the issue arises when the employer contribution isn't particularly high and the worker makes so little money that he or she would qualify for a subsidy on the private exchange. If the government is going to subsidize the working poor who purchase insurance on an exchange, shouldn't it also subsidize the working poor who purchase insurance through their union plans?

The unions could just ask that workers get the money from the health insurance contribution in cash so that they can use it to buy plans on the exchange. But if the union plans have better morbidity than the exchange plans (and I'm guessing they normally would), that would represent an increase in premium.