Obamacare: Impact on Businesses, GCSE Coursework Example

I am writing this letter to highlight some of the issues related to employee mandates within the current Health Care Law in the United States. The Patient Protection and Affordable Care Act has made it mandatory for companies with more than 50 employees to provide health insurance coverage for workers, but it failed to deliver support and guidance for business owners, making it difficult for them to survive in a competitive economy. According to the Heritage Foundation’s study (Ligon, 2010), the new legislation is likely to have adverse effect on businesses and employees of small firms: “the increased costs of health insurance will cause many firms with 50 or fewer employees—perhaps most—to either not offer coverage or drop coverage if they currently offer it” (Ligon, 2010, p. 2). According to Mason et al. (2012, p. 156), “about 28% of non-elderly adults did not have health insurance at some time in 2007, while another 20% were uninsured, with a high economic burden of health care relative to income”. One potential impact of the legislation on small businesses is that they would reduce the number of workers in order to avoid providing compulsory health insurance, and this would certainly disadvantage both workers and America’s health care budget.

The author of the current proposal suggests that the Committee proposes a policy that provides extensive support for small and medium sized businesses to locate the most affordable, most comprehensive health insurance policies, and create free training, on top of current incentives to increase companies’ participation in health insurance provisions. According to a recent Towers Watson survey on employers (2014), “employers are clearly committed to providing subsidized health care benefits to active employees, even in an environment of continued health care cost increases, uncertainty about some provisions of health care reform and an economy that is slow to recover”. However, some lack financial and training support that is needed to effectively budget for health care provisions, select the right plans, and manage administration costs associated with providing the employee benefit. The survey also found that in 2013/2014, based on the research of 595 employers, “high-performing companies were able to manage costs by implementing the most effective tactics for improving workforce health”. Financial, training, budgeting, and policy support is needed to empower smaller, struggling businesses.

The government should propose changes to the Patient Protection and Affordable Care Act to help companies make the most out of their tax credit allowances, deal with higher costs related to increased regulation and compliance requirements, and extend tax relief on non-payroll benefits provided for employees. Thomas &Molk (2013, p. 61) provides an example of conflict between employers and provisions: “Assume an employer has 100 full-time employees. The insurance the employer offers costs $5,000 per employee per year, approximating recent estimates of the cost of “adequate” insurance.21 The employer faces three choices: offer no insurance, offer inadequate insurance, or offer adequate insurance”. The current text of the law does not offer guidance or support for employers, and makes them either become non-compliant, or significantly increase their operational costs. As the authors highlight the risk, employees can decide to lay off some workers, and avoid health care responsibilities. As the current law does not offer adequate provisions and incentives, it is likely that many employers will decide to take this step. This would reduce coverage, disadvantage employees, and increase the health care budget. The current proposal argues that the United States House Ways and Means Subcommittee on Health carefully researches possible cost-effective solutions to encourage employers to provide health insurance for their workers, through education, support, and incentives.

References

Ligon, J. (2010) Obamacare: Impact on Businesses.Heritage  Foundation. No. 2883. April 27, 2010.

Mason, J., Leavitt, J. K., & Chaffee, M. W. (2012). Policy & politics in nursing and health care (6 th ed.). St. Louis, MO:: Elsevier Saunders.

Thomas, S.  &Molk, P. (2013) Employer costs and conflicts Under The Affordable Care Act. Retrieved from http://cornelllawreview.org/files/2013/10/99CLRO56-October.pdf

Towers Watson Company. (2014) Full Report: Towers Watson/NBGH 2013/2014 Employer Survey on Purchasing Value in Health Care. The New Health Care Imperative: Driving Performance, Connecting to Value. Retrieved  from http://www.towerswatson.com/en/Insights/IC-Types/Survey-Research- Results/2014/05/full-report-towers-watson-nbgh-2013-2014-employer-survey-on-purchasing-value-in-health-care