(Bloomberg) — Ron Nelsen used to cringe when one of his five employees got sick. The owner of an electric garage door company in Las Vegas, Nelsen knew he'd pay for it when insurance renewal time rolled around. "I'm ashamed to say it, but I would just have this sinking feeling in my gut."
Nelsen is part of what should have been one of the ripest markets for the Affordable Care Act health coverage expansion programs. Small businesses have been clamoring for changes in the small policy market for 30 years, according to surveys conducted since 1986 by the National Federation of Independent Business. The cost and difficulty of insuring their workers topped the businesses' list of concerns in every single survey. Not even taxes came close.
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But Obamacare didn't win over small enterprises, a misstep that cost the ACA crucial support in its fight for life. Small business interests got too little attention from an administration focused more on the individual market. So far, Republicans meeting to replace the law appear to be headed toward the same mistake. Congressional Republicans are not only focusing on individual health consumers like the Democrats did eight years ago, they're looking at capping the federal tax breaks that workers and companies get for employer-provided health insurance, which would make coverage more costly for all businesses.
Individual market
The Obama administration concentrated almost exclusively on the individual insurance market and put small business on the back burner,"not recognizing that the majority of people were working and working overwhelmingly for small business," said Barbara Otto, director of Health and Disability Advocates in Chicago, which advocates for health care access.
More than 56 million Americans work for small businesses, according to the U.S. Bureau of Labor Statistics, with businesses having fewer than 50 workers making up more than 90 percent of the nation's employers. By comparison, more than 12.2 million people signed up for individual insurance through the ACA public health insurance exchange system for 2017, according to the Henry J. Kaiser Family Foundation in Menlo Park, California.
Employer-based health benefits are the largest source of insurance coverage in the U.S., although the percentage of employers offering them has been falling for almost two decades, led by employers with 50 workers or less, according to a 2016 Kaiser study.
The decline continued after the Affordable Care Act, which required employers with 50 or more employees to offer insurance benefits but exempted smaller employers from a mandate to offer benefits. The requirement was also delayed on larger employers, going fully into effect only last year.
Small business coverage
Even so, the majority of small businesses offered at least some coverage last year: 53 percent of employers with less than 50 workers and 89 percent of those with 50 to 99 workers provided it, according to the Kaiser data. Kaiser also tracked a roughly 15 percentage point increase in the number of previously uninsured small business workers who got insurance through Obamacare's individual market since 2013.
As the Republican Congress and Trump target the health care law, they should make small business insurance coverage their focus, said Otto.
"Small business must have a seat at the table," she said. "They were not central to the first round of health care reform. By making small employers the cornerstone of any ACA repeal and replace actions, the new administration can provide an economic boost to this sector while simultaneously meeting key health insurance coverage goals."
The replacement plans floated before Congress took a break this week continue to emphasize the individual market, including who will get subsidies, how insurance will be sold, and when and how customers will be allowed to sign up for it. Republicans also are looking at putting caps on the decades-old policy that made employer-based health benefits the norm, by exempting them from income tax, and are considering lifting mandates that employers offer insurance that meets minimum coverage standards.
HealthCare.gov managers never put much effort into marketing to small groups. (Image: HealthCare.gov)
