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Affordable Healthcare For Small Business Owners
Since its implementation, the Affordable Care Act has provided health insurance to more than 20 million people. Many are small business owners, sole proprietors, or employees of small companies. More than 5.7 million small business employees or sole proprietors are registered in the ACA marketplace; more than half of all ACA market participants are small business owners, sole proprietors, or small business employees.
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Attempts to repeal the law have so far failed, but Congress has significantly modified it by repealing the individual mandate penalty. In addition, the Trump administration announced changes that would undermine the individual market, including increasing the amount of time people can use short-term health insurance and allowing associations to offer group plans that do not meet ACA requirements. These changes ignore the important benefits that the ACA provides to the small business and self-employed community.
Before the ACA, small businesses and their employees made up a disproportionate share of the uninsured workforce. In 2011, six out of 10 uninsured workers in the nation were self-employed or worked for companies with fewer than 100 employees.
Recent analyzes show significant gains in coverage for small business owners, the self-employed, and small business employees, as a result of ACA market access and Medicaid expansion in many states. Unrated rates have fallen.
Many small businesses can now easily cover their employees. The ACA's marketplace rules prohibit insurers from setting premiums based on a company's health and demographics. Fears that the ACA will lead to lower rates offered by employers are unfounded. While some provisions of the law need to be strengthened, this brief examines the evidence and finds that the ACA has helped small businesses and their employees gain access to more affordable and comprehensive health insurance.
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Before the ACA, small business employees and self-employed individuals were more likely to be uninsured than employees of large corporations. The costs associated with providing coverage mean that small businesses often cannot afford employer-sponsored coverage. In addition, most insurance companies charge higher rates for people who discriminate based on other characteristics such as pre-existing conditions or health status, gender or type of industry. Marketplace deregulation, the ACA marketplace, and subsidies have led to lower uninsured rates for the small business community.
According to the US Census, in 2013 there were 36.3 million non-elderly persons employed in businesses with fewer than 50 workers in the United States, 28.1 percent of whom were uninsured. At the time, uninsured small business workers accounted for 40 percent of all uninsured workers in the United States.
Since the implementation of the ACA, there has been a significant decrease in uninsured rates. In 2016, businesses with fewer than 50 employees employed 36.1 million people. 19.4% of them are not insured.
There are similar benefits for self-employed individuals. In 2013, 29 percent of self-employed adults were uninsured.
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In 2016, this figure decreased by 19.2 percent. Nearly 12 percent of these individuals find coverage through Medicaid, with additional insurance benefits from enrolling in the marketplace.
In early 2017, a U.S. Treasury Department report found that the ACA marketplace played an important role in helping small business owners gain coverage. According to the report, 1.4 million marketplace users are sole proprietors, small business owners, or both, meaning that in 2014, one-fifth of marketplace users were small business owners or sole proprietors. There are almost three times more people who are employed. Market coverage than other consumers. .
The ACA marketplace is critical for small business owners and low- and moderate-income individuals. Small business owners and other self-employed workers with annual incomes below $40,000 are more likely to use the marketplace to purchase health insurance than other consumers in that income range. 33 percent of sole proprietors, 37 percent of small business owners, and 36 percent of gig economy workers with incomes below $40,000 are enrolled in market coverage.
Many individuals and small business owners are gaining access to health insurance because of the expansion of Medicaid benefits. The ACA allows states to expand Medicaid coverage to adults with incomes below 138 percent of the federal poverty level (about $16,600 for an individual and $34,000 for a family of four). As of 2018, 33 states and the District of Columbia have expanded Medicaid, leading to lower uninsured rates in the state.
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In states that expanded Medicaid, the average uninsured rate fell from 18.4 percent in 2013 to 9.1 percent in 2017.
In states that did not expand Medicaid, the share of uninsured adults fell from 22.7 percent in 2013 to 19 percent in 2017, a smaller decline. Medicaid expansion directly benefits small business owners and their employees. The rate of self-employed workers covered by Medicaid increased from 7.3 percent to 11.6 percent between 2013 and 2016.
In addition, the percentage of small business employees covered by Medicaid increased from 9.1 percent to 13.4 percent over the same period. As of 2015, the Center on Budget and Policy Priorities estimates that 1.7 million small business employees were covered by the Medicaid expansion.
Additionally, according to the US Census Bureau's 2017 Current Population Survey (based on 2016 data), in 2016, 13 percent of employees at companies with fewer than 25 employees received health insurance through Medicaid. 11.2 percent of the employees in the insured companies are between 25 and 99 years old. the staff did the same. Enrolled in Medicaid. Overall, the number of small business employees (companies with 99 or fewer employees) enrolled in Medicaid increased by about 50 percent between 2013 and 2016 (Figure 1).
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Among states that have not expanded Medicaid coverage, approximately 2.2 million adults are in the coverage gap, according to a June 2018 report by the Kaiser Family Foundation.
This means that you don't currently qualify for Medicaid or don't have enough income to buy your own coverage on the private market, but would be eligible for Medicaid if the state expanded. Of these individuals, including 1.1 million working adults, half (50%) work in small businesses with fewer than 50 employees and an additional 6% in businesses with 50 to 99 employees. If all other states expand Medicaid, about 616,000 small business employees could be covered.
Many small businesses that provide health insurance coverage have seen slow annual premium growth in the years since the ACA. Since 2010, small business health premium growth has been at its lowest level in years after regularly doubling before the law took effect (Figure 2).
Other data from the Kaiser Family Foundation's 2017 Employer Health Benefits Survey shows that premiums for small businesses that offer coverage to their employees have remained stable. For all companies with 3 to 199 employees, the average premium increase from 2016 to 2017 was less than 1 percent. This was lower than the average premium growth for all company sizes from 2016 to 2017, which was 4 percent for single insurance and 3 percent for family insurance.
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An analysis of data from the Agency for Healthcare Research and Quality found that average annual premium growth for small businesses was lower after the ACA was implemented. According to the report, the average percentage change in premiums for businesses with fewer than 50 employees was just 3.1 percent between 2011 and 2015, down from 5.1 percent between 2006 and 2010 (3 picture).
In addition to overall premium growth, employee contributions for employer-sponsored insurance coverage in small businesses also held steady; In 2017, workers at small, individually insured companies paid an average of $9 more in premiums than in 2016.
However, recent policy changes, such as the repeal of the individual mandate and the weakening of ACA requirements, could cause premiums to rise faster than expected next year. It remains to be seen how these expected increases will affect small group coverage purchased through the individual market.
Critics of the Affordable Care Act say it will cause many employers to stop offering health insurance, but the data do not support that claim.
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A comparison of coverage before and after the ACA shows a decline in the rate of employers providing health care that began before the law. According to the Kaiser Family Foundation, the percentage of companies with employer-sponsored health care declined from 66 percent in 1999 to 59 percent in 2009, the year before the ACA was passed. For companies with 3 to 199 employees, this reduces annual coverage by an average of 0.6 percent.
The data show that offer rates remained roughly the same after the ACA, and the low decline was consistent with pre-ACA national trends. Overall, the average annual decline in bid rates between 2012—the first year of coverage expansion.
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