“When it comes to the debate over health insurance, one thing is for certain: the current system is terrible for small business. As it is now, small businesses usually have the hardest time getting insurance, the smallest choice among providers, and pay the most for the least coverage. Many people who would like to start new businesses are stuck in jobs because they can’t afford to give up health insurance from their current employer. So, please Mr. President and Congress Members, give us a break.”
That was what I wrote for Gannett newspapers in October 1993, 24 years ago. Long before the Affordable Care Act (the ACA). Long before the now apparently deceased Republican plan to “repeal and replace” the ACA.
Wow. Over two decades have passed, and health insurance in this country is still a mess.
This week, a Republican proposal to replace the ACA appears to not have the votes necessary to pass, and Republicans may now attempt to just repeal the ACA. That would be bad news for small business and the self-employed. Very bad news, indeed.
Let’s be clear: With the ACA, small businesses and the self-employed have high costs and limited choices of doctors. Without the ACA, we’ll have higher costs, worse coverage, or no coverage at all.
Here’s the dirty little secret of health insurance: insurance companies don’t like covering small businesses, and they hate insuring the self-employed. Why? Individuals and small groups are just too big a risk. Insurance is designed to spread risk among large groups, especially those with plenty of young, healthy people paying premiums for services they don’t use.
Before the ACA, many self-employed individuals and small businesses were pushed out or priced out of health insurance. Nearly one out of five insurance applicants were denied coverage altogether due to pre-existing conditions and more than a third were charged higher rates, according to a Department of Health and Human Services (HHS) study.
Keep a few facts in mind:
- Small business owners are old. More than half of all small business owners are over 50 years of age. Another 33% are between 35-49 years of age.
- Small business owners and the self-employed are likely to have pre-existing conditions. According to HHS, 75% of Americans aged 45-54 have a pre-existing condition, and 84% of those 55-64 have such a condition.
- Overwhelmingly, the self-employed are likely to qualify for ACA subsidies, applicable to households up to 400% of the Federal Poverty level. That’s $47,550 for a single person household, $97,200 for a four-person household. More than 19 million of the 24 million “non-employer” businesses had total receipts of less than $50,000 in 2015.
Many key provisions of the ACA directly, if not especially, help small business owners and the self-employed:
- “Guaranteed issue” – everyone can get health insurance, meaning you can leave a job to start a business and still get insurance.
- No exclusions for pre-existing conditions – meaning if you have high blood pressure or arthritis or ever had a substance abuse problem, you can still get health insurance.
- “Community” rating – insurance rates set based on the health of those in a community rather than one individual’s own health.
- Subsidized insurance for low income individuals – meaning you can afford insurance in your first years in business or if you don’t make much money.
- Minimum standards for what insurance must cover – insurance must cover preventative care and provide adequate coverage for most conditions.
- “Health exchanges” for those not covered by employers’ plans – meaning your small business employees can get insurance making it easier for you to attract talent.
- No lifetime cap – meaning one terrible illness cannot cause you to lose insurance for the rest of your life.
The health care system in the US is broken. Americans spend more on health care than any other developed country, and we have less to show for it, with shorter lifespans. We pay more for prescription drugs. We keep spending a higher percentage of our GDP on health care, making America less competitive.
Unless you believe, despite all evidence to the contrary, that an unregulated “free-market” health care system will miraculously remedy itself, it’s going to take intelligent government action to cure this sick system. The only prescription is for bi-partisan, non-ideological compromise by our elected officials. Let’s hope that’s one prescription that will be filled.
Copyright, Rhonda Abrams, 2017
This article originally ran in USA Today on July 19, 2017