The optimistically named Affordable Care Act is an experiment that has failed. And although the intent to cover more Americans – particularly those most at-risk – is honorable, the wake of that failure has caused countless hardships to vast segments of our society, including the backbone of our country, small businesses.
The law that inspired so many with its promise of inexpensive health care for the masses is now trapped in a downward spiral. Not only does this death spiral threaten the well-being of so many of the very people the ACA was meant to protect, but it is also creating financial hardships for small businesses, the very mom-and-pops that provide the overwhelming number of jobs that fuel the American economic engine.
The reasons for the ACA’s death spiral are too numerous to list here; however, one fundamental flaw is that insurance works only when the risks are spread across large pools of numbers, in effect ensuring that all claims – large and small – are covered at the lowest cost for premiums. But, because the ACA eliminated the pre-existing-condition exclusion and established guaranteed-issue health insurance, those who are healthy wind up paying a disproportionate amount to cover the claims of the very ill.
Worse, the ACA fine and penalty structure enacted in the ACA to prevent this scenario from happening is so grossly misaligned that it only contributes to the problem. The current fine structure actually provides healthy people and small businesses with a financial incentive to forgo insurance altogether, causing the “large pool of numbers,” necessary for insurance to work to quickly evaporate.
As for small businesses, according to the United States Small Business Administration, there are roughly 5 million businesses with 50 employees or less; these are the very businesses that fuel job creation and are the backbone of this nation’s economy. But the ever-rising costs of providing health care coverage have effectively tied a noose around the throats of these business owners, who the nation depends on to create jobs and drive capital investment.
Local business owner and co-author John DeWorken has an acute – but not uncommon – understanding of the problem. DeWorken and his business partner have seen insurance rates for their three small businesses skyrocket. To cover just two lives and in only five years, their rates increased from $404 per month to more than $1,000 monthly, with few added benefits and an egregiously high deductible in return. DeWorken and his partner are far from alone as they struggle to take care of their businesses. Multiply those rate increases by the millions of small businesses and individuals impacted by ACA: It does not paint the picture of a healthy future for any small business.
It helps to remember that the ACA is often referred to as “health care reform.” The ACA, however, never really addressed the very reason the reform was needed – the cost of health care. Instead, the ACA sought only to treat a symptom. To fix the root issue, our elected officials will have to address health-care costs, which include an array of complex issues related to the root causes, not the symptoms. Only then can we have health care that works.