In the Alliance’s home state of Massachusetts, Alliance business leaders have been living with the direct forerunner of the national Affordable Care Act since 2006, when then-Governor Mitt Romney signed into law a very similar program which has revolutionized the health care landscape.
We bring good news for the nation’s business community: it works, and it helps. It helps businesses, employees, and communities cope with the challenge of living with our nation’s health care system.
But the protracted and often irrational national debate has clouded the picture for business leaders and entrepreneurs. Claims and counterclaims muddy the water, and have led to some concern and confusion. To get a clear view, let’s dispel some persistent myths about what the Affordable Care Act will do in the real world.
Fortunately, we have real-world experience to tell us how the law will work – just look to Massachusetts.
1) The health law is a drag on the economy, and a job-killer. Surely this is the most potent and damaging myth out there. In fact, the new health care regime has gone a long way to unlock entrepreneurial dynamism in Massachusetts. The drag on small-business creation created by dependence on an employer’s health insurance is called “entrepreneurship lock,” and a study by the Kauffman-Rand institute has documented this effect. Universal health care promotes small business growth, since innovators and risk-takers can now afford health insurance. Roger Freeman, CEO of sustainable energy development company Solventerra in Boston, would never have been able to found his business before the days of universal health care. “Without the support the program provides, I could never have struck out on my own. The law is a job- and business-creator.”
The entrepreneurial freedom provided by the law inspires employees as well. Many who previously felt shackled to a job by the need to stay with their health plan can now seek jobs where their talents can find the best reward, and where they can make their best contribution. Employees and employers alike benefit when talent is free to seek its best niche.
2) Small businesses will be stifled. Actually, the law benefits small businesses by leveling the benefits playing field, and making it possible for them to compete with larger enterprises to hire the talent they need. When a small employer can afford a package similar to the one a large company offers, it’s in a better (and fairer) position to compete in the labor market. The federal government even aids employers with less than ten employees to provide that health insurance through tax credits.
The small business benefits don’t stop there, which is important because small businesses are the majority of businesses. Companies with fifty or fewer employees are not required to provide insurance, but they can still choose to provide affordable insurance through the insurance exchanges. Health insurance exchanges effectively give small businesses and self-employed individuals the clout to get lower premiums the way large corporations do: by becoming part of a large group, for better risk-pooling. In addition, the complexity of buying health insurance is tremendously reduced by working through exchanges, which are effectively one-stop shops for affordable insurance.
And what about small business owners? The Kaiser Foundation found that one in four small business owners didn’t have health insurance in spring of 2013. Business owners need affordable insurance too!
3) The cost is just too high. For all businesses, large and small, the cost containment features in the program will help limit the rise in premiums in the future, which also benefits any employees who pay a portion of the cost. And a business which simply can’t meet the price always has the option of paying a fee instead, which will help cover the cost of meeting the needs of those who are still uninsured.
The Medicaid expansion portion of the bill, which the Supreme Court allowed states to choose to participate in or not, lowers the cost of health insurance for those who most need help, and also alleviates much of the burden on businesses with low-income workers. Right now the cost of caring for individuals without insurance who receive hospital care is borne by everyone, in one way or another. Medicaid expansion brings more federal funds into state to support better health care for the lowest-earners, and it helps to reduce the price of private insurance by moving the costs of caring for the formerly uninsured into an insurance model.
The trepidation in the business community is understandable, as the new program represents a seismic shift in how our society approaches health care, and anything seismic is liable to create misgivings among business owners.
Fortunately, the Massachusetts experience gives us a clear picture of what lies ahead, and the news is good. Everyone benefits from a stronger, healthier community, business included. As business owners and investors, we support the extension of affordable care across the country. Just as in Massachusetts, businesses across the country have reason to look forward with confidence to the new era dawning in health care insurance.