Obamacare’s Small Business Exchange Hampered by Delays
by Kenneth Artz
April 25, 2013
The Obama administration has announced a delay in implementing the insurance exchange designed for small businesses and their employees.
The one-year delay in starting the new insurance marketplace specifically for small businesses means employers in many states will not be able to provide workers with a choice of health plans. Instead, they will be limited to a single plan in the government-run marketplace.
Beginning January 2014, the small business exchange was supposed to be available to employers with fewer than 50 workers. Now, however, the administration will delay it until 2015 in the 33 states where the federal government will be running the program’s health care exchanges.
Failing to Meet Benchmarks
Sally Pipes, president of the Pacific Research Institute, says as the original 2014 start date gets closer, other ObamaCare programs are also failing to meet their benchmarks and are being pushed back.
“A lot of the federally funded exchanges are not going to be ready by that date, and now the administration is delaying the employee choice program until 2015. This may be the start of the great unraveling,” said Pipes.
Pipes says the law is going to force insurance premiums higher.
“Because of things like guaranteed issue, where a policy is offered to any eligible applicant without regard to health status, and minimum essential benefits, which will require many individuals and small businesses to purchase more expensive and more comprehensive health care policies than they are used to, ObamaCare is going to be very costly and very confusing,” Pipes said.
“So much for President Obama’s claim that the ACA would make health insurance cheaper,” Pipes said.
Lack of Affordability
Devon Herrick, a senior fellow with the National Center for Policy Analysis, notes small businesses will not be penalized for not offering coverage to their workers, and firms larger than 50 workers that fail to offer health benefits will not have to pay penalties on the first 30 workers.
"This is another example of how the Affordable Care Act will prove to be anything but affordable. Without access to affordable coverage for workers, many employers will abandon their health plans and send workers to the publicly subsidized health insurance exchanges," said Herrick.
In addition, Herrick notes, moderate-income workers will likely get more generous subsidies in the individual exchange. Thus it makes little sense for many small employers to offer health coverage.
“This delay will further encourage small firms to abandon health coverage and foist the cost on taxpayers,” Herrick said.
Shifting Costs to Taxpayers
John Dunn agrees. He’s a physician, lawyer, and policy advisor for The Heartland Institute, and he notes the problems in creating the exchanges exemplify the flaws of an administrative welfare state.
“Moving the date back a year is all part of the administration’s Kabuki theater—the Democrats want everybody driven to the exchanges, but they don’t want to be tied to it, especially right before an election, so they’re moving it back one year, after the 2014 midterm elections,” Dunn said.
Small-business premiums are going to go up tremendously, he predicts.
“They know small businesses are going to drop out of providing health care for their employees, sending them to the exchanges. The result will be that people who decided they have to have health insurance are going to be ‘insurance poor.’ The new policies will be very expensive, meaning the policyholders who take them will not have any discretionary income. These prices are going to be unbelievable—$20,000 premiums in some states—but there will be subsidies for people below the poverty line,” said Dunn.
Dunn believes cost-shifting to the taxpayers is inevitable.
“Basic economics should tell you that no employer on the planet will pay that high a premium when the penalty is so low. And initially they will be rewarded by driving people out of employer health care and into the exchanges, then the government will gradually increase the penalties employers pay,” said Dunn. “The government drives the system into this terrible price hole and then offers the solution, which is to take over the industry and control the money. Under these conditions, there is always a shifting going on.”