Stable Insurance Markets are Key to Small Business Success

Huffington Post

Despite months of speeches, speculation and tweets suggesting that the federal government would not continue to provide critical payments that support the Affordable Care Act (ACA) marketplaces, President Trump still has yet to announce a final decision on the future of cost-sharing reduction subsidies (CSRs), which help reduce out-of-pocket healthcare costs for low and moderate-income enrollees. While the president did agree to make the CSR payments for August, there is no telling what he will do in coming months, and his ongoing rhetoric about wanting to let the ACA collapse is hardly reassuring to small business owners and their employees who depend on the exchanges for coverage. This is why lawmakers must act now to pass bipartisan legislation that will strengthen the ACA marketplaces.

Under the healthcare law, insurance companies receive payments from the federal government for cost-sharing subsidies that lower the deductibles and co-pays of single enrollees who make less than $30,000 a year, and for families making no more than about $61,000. The Congressional Budget Office (CBO) recently estimated that discontinuing these payments would cause insurance premiums to skyrocket by 20 percent next year and 25 percent by 2020. In addition to raising premiums, the CBO report finds ending the CSRs would actually increase the federal deficit by $194 billion because consumers would need additional tax credits to offset their premiums and it would cause one million people to lose their health insurance coverage.

Eliminating these subsidies would also likely result in a mass exodus by insurance companies from the individual market, meaning an unknown number of entrepreneurs would be unable to afford health coverage for themselves and their employees, while aspiring entrepreneurs would be unable to start a new business at all because they won’t be able to access affordable health coverage. After all, a recent U.S. Treasury Department study found 1 in 5 marketplace participants in 2014 was a small business owner or self-employed.

The good news is the problems underscored by the CBO are easily preventable – President Trump just has to keep the CSR payments going. This is critical because many entrepreneurs and their employees depend on these subsidies to make coverage affordable. What’s more, the lack of certainty regarding these payments has already created instability in the marketplaces, causing many insurers to exit or drastically raise premiums for 2018.

There is much more, however, that must be done to bring greater stability to the ACA marketplaces so that small businesses and their employees can continue to access quality, affordable healthcare. Lawmakers can further strengthen the ACA and the health insurance marketplaces by enacting the following:

  • Improving existing healthcare markets to incentivize insurance companies to remain in those marketplaces, including strengthening risk adjustment for insurance companies, which can also help lower costs for consumers;
  • Creating a permanent reinsurance program, which would help stabilize premiums in the individual marketplaces by protecting insurers from big financial losses;
  • Reinstating the ACA’s risk corridor program to help protect against insurance companies that overprice or underprice their products in order to keep premiums low and insurance markets sustainable;
  • Continuing to expand Medicaid, a program that under the ACA has provided coverage to 14 million more Americans, including nearly two million small business employees; and
  • Promoting robust enrollment marketing and outreach and reinstating the November 15-February 15 enrollment period, as well as fully funding outreach and education efforts–something the Trump administration recently announced it plans to drastically cut.

Now that efforts to repeal the ACA have failed, President Trump must stop toying with the health coverage of millions of small business owners and their employees, stop using healthcare as a political pawn, and stop undercutting the ACA. It is crucial to improve the law and strengthen the health insurance marketplaces to ensure small business owners, their employees and self-employed Americans have access to the coverage that is necessary for their success and prosperity.

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