Health Care Reform: The Sky is Not Falling
A new statistic has hit the media cycle designed to send all of our hind brains into panic and pressure the Democratic party into backing off of the Affordable Care Act (ACA). The statistic is this: 30% of employers intend to stop offering employer based health insurance when the ACA comes to pass fully in 2014.
Enough to make you shake in your boots, right? How will all those people get insurance? They're going to be abandoned! Things are going to be worse than ever!
Relax.
Really. Just relax. The sky is not falling, Chicken Little.
The reality is – that's what the ACA was (in part) designed to do. The United States is one of very few countries in the world that tie health care to job status, and there's a reason for it not being a common model – it's unattractive for both the employer and employee.
From an employer's perspective, not having to cover health insurance makes small business startup a lot less expensive and a lot less risky. A small business which suddenly discovers that one of its key employees has an expensive health condition currently often has to make a heartbreaking decision about whether to continue to offer health care, as the small employee group can rapidly price premiums out of the business's reach. Paying a penalty for not covering health insurance is a very risk-averse way to deal with the issue, but a valid one for many businesses.
The health care pools built into the ACA spread the risk much further, plus add in the young and healthy to the insurance pool (that is the justification for the provision allowing young adults to stay on their parents' plans and for the health insurance mandate). This will bring the cost down for individuals significantly – and for low and some middle income families, the subsidy provided by the federal government will replace the current employer subsidy.
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