There has been much discussion recently on the pros and cons of the Affordable Health Care Act and its impact on employees and their employers. The idea is to provide coverage for all Americans and reduce the overall costs associated with Health Care and Health Insurance. So is this really the case? Will employers be able to use Heath Insurance as a recruiting advantage in the future? Does the Affordable Health Care Act actually make health insurance more affordable? Let’s look at the numbers and see what impact it will have on both employers as well as potential and existing employees.
As a business owner I have personally seen health care premiums increase each year. We either budget for the increased cost, lower overall benefits to maintain costs, or increase the employee contribution to defer some of the cost. Each of the past 5 years we have received an average cost increase of 8-11% in our monthly premiums.
Let’s look at some of the factors that are now effecting employees and employers as part of the Affordable Care Act which will begin implementation January of 2014.
- General Trends – As in previous years, employers have received a regular increase to their health care premiums. This “trend” increase is not a surprise and will most likely continue each year with our without implementation of the Affordable Health Care Act. The 2014 calendar year is no different and we are anticipating an increase of 4-9 percent.
- Taxes Fees – Due to implementation of the Affordable Health Care Act, new taxes and fees have been levied on ALL insured groups. Although the amount of fees varies, this increases health care premiums 4-6 percent. (I thought this was supposed to be affordable????)
- Industry Factor Removal – For as long as I can remember, insurers were able to provide lower premiums to certain industries that had a proven lower exposure to health care costs. In the case of the recruiting industry, we were considered a favored industry with a bit lower premium. The Affordable Health Care Act has now removed this rating scale, resulting in a premium increase of 4-6 percent (Wait, premiums are still going up????)
- Rate Band Compression – In years gone by, insurers rated employs on a broad scale of risk when they looked at age, etc. The new Affordable Health Care Act has narrowed this range in a big way, increasing premiums for younger and healthier groups. In our case we will see an increase of up to 8 percent on our premiums.
- Member Level Rating – Health insurers used to provide insurance coverage in 3 basic buckets: Single, Couple, Family. Under the Un-Affordable Health Care Act those ratings have changed to: Single, Couple, 2+1, 2+2, 2+3, etc. In other words, premiums will now increase for every new family member introduced to the policy. In addition, dependents age 21 and over will have a higher rated premium than those 20 and under. In our case this increases our premiums by up to 31%!
These are just some of the trends effecting employers and their insurance premiums starting in less than 4 months. In the case of small businesses which employ the vast majority of the US population, the cost addition will be staggered. Employers will be faced with a decision of how to absorb these additional costs. In many instances the level of coverage will decrease and in others the employee will be forced to pay a hefty increase as their share of the premium. For most organizations, the Affordable Care Act has already proven to INCREASE costs to both employers and employees – isn’t this more of an UNAFFORDABLE Healthcare Act?
The numbers referred to above are REAL – they are not potential estimates – they are based on concrete numbers directly from insurance providers. It’s time we look at the real financial impact this will have on both employers and employees and remove political opinions and viewpoints.