8 Ways to Improve Obamacare
Outright repeal of the Patient Protection and Affordable Care Act, or Obamacare, is not a practical option. But as U.S. Chamber President and CEO Tom Donohue says, “Just because we’ve been saddled with a burdensome law doesn’t mean we have to settle for a dysfunctional health system.”
Below are eight reforms that address variation and disparity in access, cost, and quality, as well as ways to ease the law’s burden on businesses and the public.
Restore the 40-hour workweek: Under the health care law, employers with 50 or more full-time equivalent employees must offer health insurance to all full-time workers and their dependents or be subject to a fine. The statute defines full time as an average of 30 hours per week in any given month. Businesses are restructuring their workforces and reducing their employees’ hours to avoid costs that could potentially bankrupt their companies.
The Chamber supports H.R. 2575, the Save American Workers Act, which would reinstate the traditional 40 hour work week for full-time work and remove the incentive for businesses to cut hours.
Repeal the medical device tax: The medical device tax, which took effect in January 2013, takes a 2.3% bite from medical device manufacturers’ total revenues. That levy on everything from tongue depressors to cardiac stents to radiotherapy equipment could lead to a slowdown in technological innovation, reduced quality of care for patients, and a hit to U.S. jobs in the middle of a sluggish recovery.
Remove restrictions on HSAs and FSAs: Consumer-directed plans, including health savings accounts (HSAs) and flexible spending accounts (FSAs), provide a low-cost and increasingly popular way for employees to save money when they choose lower-cost health care services and products.
Under Obamacare, employee contributions to FSAs are limited to $2,500 per year, indexed by the consumer price index in subsequent years. Further, individuals will no longer be permitted to purchase certain items, including most over-the-counter (OTC) medication without a prescription, with their FSA and HSA funds. The Chamber supports S. 610, the Family Health Care Flexibility Act, which would repeal limitations on HSAs and FSAs.
Repeal the Health Insurance Tax: In January 2014, insurers will be hit with a health insurance tax (HIT). The HIT is a fixed-dollar amount distributed across health insurance providers: $8 billion in 2014, $11.3 billion in 2015–2016, $13.9 billion in 2017, and $14.3 billion in 2018. The HIT singles out health insurance policies purchased on the fully insured market, where 88% of small business owners purchase coverage.
A study by former Congressional Budget Office Director Douglas Holtz-Eakin shows that the HIT will cost families about $5,000 in higher premiums over the next decade. The NFIB Research Foundation found that the tax will result in as many as 262,000 fewer private sector jobs and will reduce national economic output by as much as $35 billion by 2022.
Permit anyone to purchase catastrophic plan coverage: The health care law stipulates that plan providers can offer four levels of coverage: Bronze, Silver, Gold, and Platinum. In addition to these four levels, the law says that a catastrophic health plan can be offered to adults under age 30 and people over 30 who cannot find a plan with a premium that is 8% or less of their income.
These catastrophic health plans cover essential health benefits and three primary care visits a year. The Chamber supports expanding the availability of lower-cost catastrophic health plan coverage in a health insurance exchange to any individual regardless of age whose employer-sponsored coverage is not affordable.
Repeal full-time equivalent employees from large employer determination: Requiring employers to determine
full-time equivalent employees (FTEs) is administratively burdensome and costly, especially for those employers just above or below the 50 FTE employee threshold. Repealing the reference to FTE employees and simply requiring employers with 50 or more full-time employees to be defined as “applicable large employers” would simplify the administrative headaches for businesses.
Eliminate auto-enrollment: Applicable large employers that employ 200 or more full-time employees and provide a company health benefits plan are required to automatically enroll new full-time employees in their lowest cost plan if the employee has not opted out of the coverage within his or her first 90 days. Businesses say that auto-enrollment has the potential to lead to lower-quality health care for all their employees.
According to a Society for Human Resource Management survey, 65% of businesses that will be required to auto-enroll their employees say that they will use their lowest-cost plan as the default. Ten percent of respondents say that they will add a new lower-cost plan to use as the default plan, and 3% say that they will change to a new lower-cost plan to use for all employees.
Increase and extend the small business tax credit: Small businesses with no more than 25 employees and with average annual wages of less than $50,000 may receive a credit of up to 35% of what they contribute toward employee premiums. Beginning in 2014, the tax credit increases to a maximum of 50% of the amount small businesses contribute toward employees’ monthly premiums—if they participate in the small business exchanges being set up by the states.
By all accounts, the small business tax credits have been woefully underused. Initially, it was expected that the credits would cost $2 billion in 2010. In May 2012, however, the U.S. Government Accountability Office reported that only $468 million in tax credits had been claimed. Part of the problem is that small businesses must complete a series of complicated tests to determine the actual amount of the credit that they are eligible to receive. Also, the credit is only available until 2016.