Is President Biden — and, by extension, Democrats — plotting to undermine employer-sponsored health coverage as part of a conspiracy to push more businesses and workers to buy insurance through Affordable Care Act marketplaces? Some claim that the motivation behind tax credits is intended to help make health coverage more affordable.
There are certainly positives to employer-sponsored coverage. The main problem is that this coverage category primarily benefits those who work for larger firms.
This means it may not be affordable for small-business employees, who make up half of all workers in the United States. Unlike bigger companies that can create their own health plans, small businesses are at the mercy of insurance companies that decide what plans they will offer. So, rather than being concerned about overregulation, small businesses would welcome policymakers putting more protections in place to ensure that their plans offer quality and affordability.
In the meantime, anything that can help reduce costs, like tax credits, is a win for small businesses and their employees.
The reality of employer-sponsored coverage affordability challenges is reflected in the feedback provided by the small-business community. Small Business Majority’s recent research found that rising healthcare costs have affected the bottom lines of small-business owners to the point that 51 percent of small employers said they had increased employee contributions to insurance. In comparison, 47 percent said they scaled back their insurance coverage offerings.
This is not due to an increase in administrative action under Biden but to an increasingly fractured healthcare market that forces small-business owners to make the difficult choice between offering high-quality health coverage for their employees or protecting their bottom line.
High healthcare costs and their effect on small businesses underscore the importance of subsidies, one of the most generous and essential provisions in the ACA. The subsidy allows anyone who does not have access to “affordable” coverage to receive a tax credit for insurance bought through federal or state ACA marketplaces, meaning healthcare is cheaper for more middle-class earners — many of whom are small-business owners and/or self-employed. The credit isn’t part of a conspiracy to force more people into government dependence — it’s a recognition that healthcare coverage is expensive.
This is not to say that the ACA is perfect. But the solution isn’t a weaker framework with less protection or fewer tax credits. In fact, small businesses would love to see the ACA strengthened. Policymakers can help small businesses by:
—Expanding access to quality affordable healthcare by maintaining the current marketplace subsidies, facilitating Medicaid coverage for those in states that have not enacted Medicaid expansion, and ensuring the full range of reproductive care for small-business owners and employees.
—Advancing healthcare cost containment by tackling anti-competitive medical provider consolidation and abusive hospital and drug pricing.
If making health coverage more affordable for entrepreneurs and their employees through the ACA counts as some government conspiracy, count small businesses in and make the law better so that small firms can focus on expanding their businesses instead of worrying about the high cost of healthcare.
