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Policy Agenda: Healthcare

Small Business Majority
Fri, 9 Feb 2018

Over the past five years, the Patient Protection and Affordable Care Act (ACA) has provided healthcare to 24 million individuals who otherwise couldn’t access coverage, many of whom work for small employers or are themselves business owners and self-employed individuals. While we believe certain provisions of the ACA can and should be improved, repealing the ACA or continuing to chip away at the law’s key provisions will eradicate hard-won benefits for America’s entrepreneurs, cause a rapid rise in healthcare costs and create tremendous economic instability.

Prior to the law’s enactment, small businesses and their employees comprised a disproportionate share of the working uninsured, while those with coverage paid 18% more on average than larger companies. Since 2010, however, the increase in small business healthcare costs has been at the lowest level in years. Meanwhile, the number of uninsured small business employees (those working at firms with fewer than 50 workers) dropped by more than four million between 2013 and 2015 and their uninsured rate fell from 27.4% to 19.6%. Additionally, more than 5.7 million small business employees or self-employed entrepreneurs are enrolled in the ACA marketplaces, and more than half of ACA marketplace enrollees are small business owners, self-employed or small business employees.

Now that attempts to repeal the ACA have failed, it is crucial to implement policies at the state and federal levels that (1) strengthen the health insurance marketplaces, (2) ensure maximum access to the law’s benefits and (3) reduce healthcare costs to ensure small business owners, their employees and self-employed Americans have access to the quality, affordable coverage that is necessary for their success and prosperity. This effort should include the following:

  • Taking immediate steps to stabilize the individual health insurance marketplaces. This must include supporting the following proposals:
    • Guaranteeing payments to insurers for cost-sharing subsidies, which help many entrepreneurs and small business employees afford health coverage. This can be done by passing bipartisan legislation sponsored by Senators Alexander and Murray that would ensure the payments through 2019 and add $100 million in funding for outreach and enrollment activities throughout the 2018 and 2019 enrollment periods.
    • Strengthening, not weakening, the current system of subsidies that has enabled many entrepreneurs to build their businesses without fear that they might lose their healthcare.
    • Improving existing healthcare markets so insurers can be profitable and competitive as part of a robust healthcare system. This includes strengthening risk adjustment for carriers in order to keep costs down for consumers and incentivize insurers to remain in the federal health insurance marketplaces. Additionally, lawmakers should create a reinsurance program, which would help stabilize premiums in the individual marketplaces by providing support for insurers facing high financial losses. Senators Collins and Nelson have proposed bipartisan legislation that would provide $4.5 billion in reinsurance funding over 2018 and 2019 to help lower insurance premiums by compensating insurers for their most expensive customers.
    • Reinstating the ACA’s risk corridor program to help protect against carriers overpricing or underpricing their products to keep premiums low and insurance markets sustainable.
    • Supporting efforts to encourage younger and healthier Americans to enroll in health insurance to maintain balanced risk pools, particularly in light of the repeal of the individual mandate penalty.
  • Strengthening the small group market so small employers can access affordable coverage and robust options. This includes:  
    • Opposing efforts to authorize association health plans (AHPs), which would encourage younger, healthier groups to purchase inadequate coverage, thus increasing costs for most of the small group market and potentially cause a death spiral. 
    • Simplifying and expanding the small business tax credit so more small businesses can afford to offer coverage to their employees.
  • Continuing to expand Medicaid, a program that has provided coverage to 14 million more Americans under the ACA, including nearly two million small business employees who gained coverage under Medicaid expansion.
  • Providing additional options for consumers in counties that have few or no participating insurers in the ACA marketplaces by allowing them to purchase plans through the Federal Employee Health Benefits Program (FEHPB).
  • Promoting robust enrollment marketing and outreach and reinstating the November 15-February 15 enrollment period. This would ensure entrepreneurs and small business employees have the information and time needed to enroll in the individual marketplaces.
  • Passing healthcare tax equity for the self-employed so that freelancers can deduct their healthcare expenses from their FICA tax obligations—just like other business entities.
  • Addressing the rising cost of prescription drugs—including allowing Medicare to negotiate prices with drug companies—as these costs are hurting small business owners' bottom lines.
  • Enacting delivery system reforms to ensure healthcare is provided in the most efficient and affordable way possible. This includes the following principles:
    • Ensuring providers are compensated on value rather than volume.
    • Creating more transparency on pricing and quality to allow patients to make informed decisions about where they receive care, which will benefit the healthcare system overall.
    • Using new technology to improve outcomes and lower costs
  • Restoring full funding for the Prevention & Public Health Fund—a program established by the ACA that helps contain healthcare costs, making it easier for small businesses to offer health coverage.
  • Ensuring access to reproductive healthcare and birth control, which is critical to women entrepreneurs as they launch and grow their businesses.