Not so long ago, employee health insurance on almost any level was a certainty.
Now, as more and more U.S. small businesses find the offering untenable because of soaring insurance premiums, employee health insurance is facing a dilemma: revamp the Affordable Care Act (ACA), come up with a new kind of private health care system, or attempt a form of universal health care—so that business owners can attract top talent and keep workers from constantly seeking better offers.
“In South Carolina, only 20.5 percent of businesses with fewer than 50 employees offer employer-based health insurance—and this problem is only going to get worse,” Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce, told The Epoch Times.
“Big businesses [with more than 50 employees] are mandated under the ACA to offer a qualified group health plan. But the number of small businesses with less than 50 [people] not offering group health is just going to continue to grow.”
Even though big businesses have had to battle rising health insurance costs by reducing benefits and increasing deductibles, they still have more leeway and more options, he said.
“Big businesses can always raise their prices for services or products, or even lay off workers—that is the way they will deal with rising health insurance costs,” Knapp said. “Small businesses simply drop the benefit.”
All of which, Knapp said, makes it hard for small businesses “to compete for labor if the big business competition offers group health.”
So what happens to job candidates when the health care incentives in big business are all taken, and the smaller places offer limited or no health care coverage?
One option catching on with both sides is the Individual Coverage Health Reimbursement Arrangement (ICHRA).
As offered through the Health Insurance Marketplace, ICHRAs allow employers to contribute tax-advantaged dollars to employee health benefits purchased on the individual market.
Ben Green, president and chief operating officer of Insurance Advantage, provided an example using a 50-year-old single woman making $40,000 per year, whose employer offers $200 per month toward a health coverage plan.
The woman could then qualify for an estimated premium tax credit of $516 per month.
This means that, depending on the plans available in the marketplace, her monthly premium could be as low as zero dollars.
However, one caveat is that many ICHRA plans with low premiums also come with higher deductibles and considerable out-of-pocket maximums.
The zero-dollar monthly payment in the above example carries an individual deductible of $7,500—which means that you have to pay for all primary care, specialist care, urgent care, emergency room care, and outpatient mental health care until this deductible is reached. And the out-of-pocket maximum is $9,200—likely lower than a no-coverage hospital visit but a lot of money to pay out on your own if necessary.
In addition to ICHRAs, some lawmakers are considering a single-payer system.
Sen. Ed Markey (D-Mass.) introduced similar legislation in July that would allow states to obtain a “super waiver” from the Department of Health and Human Services to provide comprehensive, universal health coverage to all residents.
But whether this effort ultimately succeeds or fails, one thing seems certain: Resolution of health care among U.S. businesses, especially small businesses, is tantamount to higher profits and minimal turnover and possibly a return to something that used to be known as employee loyalty.
“We know that a healthy employee is a more productive employee,” Knapp said. “That is why we encourage small businesses that do not offer group health insurance to help their workers with coverage via the federal health insurance marketplace.”
