Because this blog is posted on my employers website and the majority of the readers are co-workers, I know with reasonable certainty that many of you have health insurance provided by your employer. You should ask yourself this question: Could the ACA cause employer sponsored health plans to soon be the exception?
One of the requirements of the ACA or Obamacare is that large employers (more than 50 workers) provide health insurance for their workers or pay a penalty – the employer mandate. The Obama administration recently placed a one year delay on the requirement but the delay and the intent of the law may have squandered an opportunity to re-evaluate the US insurance system.
The US is the only advanced industrial nation without universal coverage and the US is a rarity in its reliance on employers for health coverage. Currently 96% of employers with more than 50 workers offer health coverage to their employees yet 72% of workers in companies with fewer than 25 employees have access to employer sponsored programs. But this isn’t only a small business problem.
In 2011 there were 22.9 million adults working in the private sector who didn’t have health insurance. This number includes 5.9 million who worked at firms with more than 1,000 employees and another 5.4 million who worked at firms with more than 50 workers. If you do the math you’ll see that less than a quarter of the uninsured work at small businesses. There are just as many working at large business as small businesses who are uninsured.
Large employers are dropping coverage which is why the employer mandate was included in the law to begin with. As a nation we are proud of our entrepreneurial spirit and anybody can start a business as long as there’s not too much government oppression. The ACA acknowledged this by exempting businesses with less than 51 employees from the health insurance mandate.
Other countries that use private insurance avoid the burden of insurance falling solely on the employer by treating health insurance just like any other social insurance program by having both employers and employees contribute a percentage of salary into a fund that then purchases private health insurance. Regardless of business size this type of option would provide health insurance to everyone and would significantly increase the pool of insured people who would in turn spread risk and decrease the cost of insurance.
The problem with the employer mandate under the ACA is it didn’t do anything to truly reform the system. It also didn’t do anything to fix the mess and the potential exists for employers to drop health coverage for workers and instead choose to pay a fine which in many cases may become a business decision because the fine could be less costly than the provision of insurance.
The recent postponement of the mandate may be an acknowledgement that we have a mess and we’re not sure how to fix it. It may also be an acknowledgement that the intent of the law – to get more people covered by insurance may in fact cause fewer people to have coverage.
In an attempt to get more Americans covered by private health insurance the individual mandate may do just the opposite and incentivize employers to drop health coverage all together.