After a serious setback in March, the GOP finally passed a bill to repeal and replace the Affordable Care Act (often dubbed Obamacare). The bill passed in the House after last-minute changes were made to convince ultra conservatives to support the proposed legislation. The new bill now faces significant scrutiny from the Senate. What does this all mean to a small business owner? The effects of such major budget cuts will vary from state to state. Much will depend on where you live and work, and on the age/experience of your workers. The reform bill is complex and its passage is far from assured, but here are some key elements that affect small businesses.
- Eliminates the taxes the ACA imposed on wealthier citizens, insurers and prescription drug and medical device makers.
- Scraps the requirement that individuals obtain healthcare coverage or face a tax penalty.
- Eliminates the mandate that employers with a minimum of 50 employees provide healthcare insurance to their employees. Under ACA, these businesses were required to provide affordable insurance to staffers who worked more than 30 hours per week. Small businesses that failed to do this faced penalties if/when their employees sought subsidies on the insurance exchanges.
- Weakens the protection the ACA had offered people with pre-existing conditions. Provisions mandating that individual states provide protection would be axed and replaced with $8 billion in funding over five years to help set up high-risk pools.
- Replaces income-based credits with refundable age-based tax credits to help people pay for coverage on the individual market. For example, credit for people in their 20s will be $2,000, while people in their 60s and older could get a credit of $4,000. These credits will have income caps.
- Significantly, the subsidies that the ACA made available to help people earning less than $30,000 per year with out-of-pocket healthcare costs will disappear. Much of the burden for delivering healthcare to lower income and disadvantaged citizens will shift from the Federal Government to the states.
- Insurers will be allowed to charge older people more than they were permitted under the ACA, which limited insurance companies to charging no more than three times the rate imposed on younger people.
The Congressional Budget Office has indicated that the GOP reform plan aims to reduce the Federal deficit by $119 billion while shifting some of the financial burden to the states. Estimates suggest that in doing so, the American Health Care Act could increase the number of uninsured people by 23 million by 2026. It has attracted concern and criticism from legislators and the debate is far from over.