Impacts of the Affordable Care Act - Research Paper Example

Impacts of the Affordable Care Act The ACA and how it adversely impacts business tax liability and their ability to expand and hire new employees. Introduction The Patient Safeguard and Affordable Care Act (ACA), is the health care law that will transform America. The ACA is comprised of several related sections including; the Patient Protection Act, the Affordable Health Care for America Act, the Health Economic Responsibility Act, the Reconciliation Act, and the Student Aid Act. The law also provides for changes to other laws like the Cosmetic, Drug, and Food Act and the Health and Public Services Act. Since being signed into law – Americans have been frantically trying to decipher the myriad of interrelate guidelines and regulation. (Health Care Reform and American Politics1). The ACA is a long, composite piece of legislation that tries to reform the healthcare scheme by attempting to provide more Americans with access to reasonably priced, quality health insurance and by attempting to reduce the growth in healthcare expenditure in the United States.2 These changes include; new patient protection rights and benefits, rules for insurance companies, spending requirements, funding, tax breaks, taxes, penalties, and the creation of committees, jobs, and education. Background On 23rd of March of 2010, president Obama signed the ACA.3 The goal of the Act is to offer all American citizens access to an easily affordable health insurance policy along with reducing the growth of health care expenditures. This is in line with the Administration’s main goal of achieving better health care in the United States. Employers with 50 or more employees will be subject to the ACA’s requirement. Employers are required to provide employees with access to health insurance as mandated in the Act. Failure to obey the new rules may result in companies getting penalized financially. The Act comes as a reprieve to the employees who lacked access to Health Care, but in doing so, it raises serious issues for employers.4 In some instances, these challenges have been so difficult that they have led to the delayed implementation of the Act. Affordable Care Act review The Affordable Care Act (“the ACA”) reforms the American healthcare industry by allegedly giving more Americans access to quality, reasonable priced, health insurance and while simultaneously impeding the growth of healthcare expenditure in the United States. Moreover, it also attempts to provide Americans with access to a number of new protections, rights, and benefits, which ensure that they get treatment when they are in need of it; thus, protecting consumers from some of the worse abuses in the health care and insurance businesses.5 The ACA purports to make insurance more accessible by reducing premium and out-of-pocket charges for tens of millions of people and small business managers who had been valued out of coverage in the past and by eliminating restrictions on pre-existing conditions. The goal of the Act is to help the 32 million Americans who could not have gotten health care otherwise. Under the ACA, 95% of Americans should be insured. In 2013, statistics showed that over 15% of Americans had not been insured. The ACA was passed to help these people. According to Commerce Clearing House Incorporated (2010), the law achieves its goal by extending risk equally to all insured individuals, which hopefully will end discrimination based on an uncovered risk or pre-existing condition.6 In order for this to be done, all Americans who can manage to pay for and maintain “Minimum Essential Coverage” must do so by May of 2014. For these Americans who cant afford this coverage, the government will provide exemptions from the necessity of maintaining the coverage or in subsidies to help pay insurance premiums.7 The ACA created a new competitive health insurance market place, which is suppose to allow tens of millions of Americans to use group buying power and obtain cost assistance. It also promises to put the U.S. budget and economy on a steadier path by decreasing the shortage of funds to pay for healthcare by more than $100 billion over the next 10 years, and by reducing government over-expenditure and reining in abuse, fraud, and, waste. The Adverse Impacts of the ACA: Tax Liability on Small Businesses. The ACA creates a new, large, mandatory spending program, worsening the projected debt loads for Americans.  In addition, the ACA contains more than $1 trillion in new taxes and a collection of costly regulations.  Some critics believe that the ACA will be a drag on economic development and job creation.8 Under the employer mandate of the ACA, these taxes and fines will impact hiring and workers’ hours for employers with over fifty full-time workers and it will assess, per-worker fines for noncompliance. The financial penalties to those that do not provide access to coverage or for companies that are considering hiring a 50th worker are clear. For instance, a 49-employee company that does not give coverage and elects to employ their 50th employee now stands to be fined $40,000 annually for non-compliance, which is the $2,000 per worker penalty above the first 30 workers. Critics of the ACA respond to this by claiming that a small business can skirt this necessity by swapping to part-time employees which will have a negative impact on the economy.9 In adding under the ACA, complex reporting requirements are common, and they add extra paperwork and expense to the cost of doing business. Even for firms that presently provide health coverage and will continue to do so, the statute requires disclosure of their workers’ earnings and health insurance plans; including names and family affiliates who are qualified, what the insurance protects, and the cost to the worker of the different schemes offered. This provision has caused such alarm that it has been delayed until 2015 instead of 2014. This 1-year deferment only temporarily delays the burden of these new healthcare requirement. Regardless of the requirement to provide coverage, financial motivations are embedded in the Affordable Care Act that encourage employers to drop health profits and shift workers onto the health insurance exchanges offered by the government. If the exchanges are directed as per the law’s original schedule and are viable in the market for health insurance, small companies will experience a decrease in profit, pay the charges, and give workers supplementary wages repayment in line with their health insurance. Additionally, the law includes a health insurance tax on all plans in the form of an exercise tax commencing in 2018 on plans deemed overly substantial (“Cadillac Plans”) and orders that small group plans cover a comprehensive list of benefits whether the insured needs them or not. All of these will result in higher costs for employers. This cuts down small firms’ capability to pay satisfactory wages, to grow their work force, or to invest in their business.10 It is clear that the law has the potential to negatively impact small businesses that are already either unwilling to employ 50 or more workers or it will encourage them to reduce working hours to make employees part-time. As a result, the labor market suffers. This is also at a time when one-out-of-seven Americans are getting food stamps and joblessness is stagnant at 7.6%. This is a time when the government needs strategies that raise the full-time labor force. The current Administration is hoping that the public will be comfortable with complex exchange application’s inquiries about their earning, employer supported insurance choices, and workers portion a given insurance, and then, even more brazenly, assuming exchange applicants will respond to every query precisely and honestly.11 Though some provisions in the ACA that relate to small businesses are now in force, such as the need to cover workers’ dependents up to those aged 26 and the ban of annual or lifetime coverage limits, the major changes begin in 2014 and 2015. As a result, much of the impact of the law is speculation at best and the result of subjective reports of employers’ benefit choices.12 The analysis of the ACA’s impacts were completed prior to the July 2013 announcement of the employer – mandate delay, but that is unlikely to alter the principal conclusions.  Business owners are reacting to the uncertainty about the effects of the Act by studying their economic choices, limiting the number of employees, and reducing work hours in anticipation of the full implementation of the Affordable Care Act. For those small companies close to dropping coverage, having the penalties and mandate delayed for one year will do nothing to alleviate this anxiety. For companies set on continuing offering their employees coverage for the future, the delay is unlikely to cause much disruption.13 The International Foundation of Workers’ Benefit Plans carried out a study in March 2013, on 966 individuals, each representing an employer-sponsored scheme from a diversity of large and small companies. The study found that business owners are feeling the impact of the cost associated with the ACA and providing access to health insurance and they are making dramatic business decisions that are directly related to their concern about the law. The findings included: It is very difficult to approximate the cost of the, taxes and health insurance charges that business owners face.  Even harder, is the ACA’s enormous regulatory scheme and the complexity inherent in sweeping changes.  In executing the Affordable Care Act, the department of Health and Human Services has dishonored the Paperwork Lessening Act a huge 154 times since 2009, which signifies over 30% of the total abuses in that time period, and almost twice that of any other managerial agency.  When the Congressional Budget Office revised the Affordable Care Act under the Unfunded Mandates Reform Act, it recognized that the law would critically exceed statutory charges thresholds in each of the first 5 years that the Act would be effective. After almost 3 years, the ACA’s regulatory problems have significantly exceeded User Management Resource Administrator’s onsets. These governing charges will place a great pressure on health issuers, hospitals, and specific small businesses.14 Moreover, the guidelines are harmful enough, but it’s also hard for small businesses to cope with and manage their current obligations under the ACA when the management is not able to comply with rules in an appropriate manner in agreement with their own targets. It’s projected that the business Management has missed one half of their self-imposed targets for projected and final guidelines associated with the ACA. Even the latest delays, which business owners are not opposed to, leaves people speculating what else will be deferred prior to 2014. The constant delays makes it hard for firms to make business decisions and do cost-benefit surveys concerning their health insurance schemes and employment decisions. Impact of Affordable Care Act on hiring The ACA will impede the economic recovery for small businesses by negatively impacting both the inclination of small businesses to increase their labor force and in turn, that will affect the demand for products in the marketplace.15 On the resource side, the income-based assessment for granting subsidies to purchase insurance on the health insurance exchanges could cut down the incentive for people to work. Starting in 2014, low-income Americans who purchase insurance through the government exchanges are qualified for grants to offset the expense. Those subsidies decreases as income increases; thus, they increase people’s minimal tax rates and cut down their incentive to work. The ACA induced reduction in the workforce will most likely be focused in the small business region because the subsidies take effect only to employees who do not get employer-sponsored health insurance. Kaiser Family Foundation shows that 99% of businesses with 200 or more employees provide worker health insurance, whereas only 57% of businesses with between 3-199 workers do. Thus, the employees who will most likely be seeking subsidies will be those who work at businesses that don’t give employee health coverage.16 The consequences for businesses with at least 50 full-time workers who fail to provide access to health insurance for their employees, (planned to start in 2015), will also negatively impact the small businesses. The CBO and many economists believe that the impact of this drawback eventually will be passed on to employees through reduced compensation.17 Almost all larger businesses provide workers health coverage, the result of the penalty on workers compensation and the successive willingness of workers to join the workforce will be felt most deeply in those small businesses that do not give employees health care coverage.18 The consequences for not providing workers with health insurance will also reduce small business owners’ ability to grow their workforce. Businesses can evade the consequences of this penalty by reducing their workforce to below 50 full-time employees. Hence, the CBO anticipates that many small businesses will reduce their workforce or convert full-time status into part time status to remain below the limit as required by the ACA. Conclusion The Patient Protection and Affordable Care Act allows the federal government to take over 1/6th of the U. S. economy and requires, one-size-fit-all health care scheme for the entire country. Despite assertions made during the passage of the ACA discussion, it does not give global health insurance coverage, does not allow people to keep their existing health insurance plans, and does not remove abuse, fraud, and waste. It will not regulate costs, and if it did, then many experts predict that will result in health care rationing, and may infringe people’s essential rights by mandating that they purchase a costly private product demarcated by the government. The country was founded on individual choice, personal obligation, and the rights of the individual over the federal regime. By now, implementation of the ACA has resulted in the loss of current health coverage for 290,000 workers in Washington State. As implementation across the country continues, the ACA will adversely impact employment, small business growth, and restrict healthcare choices for other states as well. The tax liability and cost of hiring new labor impacts of the ACA includes reduction in employment and the decline in small businesses, staggering decline in economic growth and a restriction on access to health care. Consumers are important in the economic growth of the United States. When businesses decline, the rate of consumption also goes down. America’s growth directly affects other growing and poor nations. It is therefore essential that the implementation of certain aspects of the law thus get further delayed or better yet, eliminated entirely, to protect small business. Citizens of United States deserve improved access to health care, its just that the Act is not the solution. References Blackman, J. (2013). Unprecedented: The constitutional challenge to Obamacare. Copeland, C. W. (2011, January 13). Upcoming Rules Pursuant to the Patient Protection and Affordable Care Act (PPACA). Retrieved from http://www.crowell.com/pdf/CRS-PPACA-Regs.pdf Foster, R. S. (2010, April 22). Foster, R. S., 2010. Estimated Financial Effects of the Patient Protection and Affordable Care Act, as Passed by the U. S. Senate on December 24 2009. Retrieved from http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/downloads/PPACA_2010-04-22.pdf Gruber, J., & Newquist, H. P. (2011). Health care reform: What it is, why its necessary, how it works. New York: Hill and Wang. Jacobs, L. R., & Skocpol, T. (2010). Health care reform and American politics: What everyone needs to know. New York: Oxford University Press. Law, explanation and analysis of the Patient Protection and Affordable Care Act: Including Reconciliation Act impact (Vol. 1). (2010). Chicago, IL: Wolters Kluwer Law & Business. McDonough, J. E. (2011). Inside national health reform. Berkeley: University of California Press. Murdock, K. (2012). Affordable Care Act: ObamaCare (1st ed.). GRIN Verlag GmbH. Ross, B. M. (2014). Beating Obamacare 2014: Avoid the landmines and protect your health, income, and freedom. Washington, DC: Regnery Publishing. Tammy, L. (2013). How Does the Affordable Care Act Impact Your Small Business? Retrieved from http://blog.intuit.com/employees/how-does-the-affordable-care-act-impact-your- small-business-infographic/ Tate, N. J. (2012). Obamacare survival guide: The Affordable Care Act and What it Means for You and Your Healthcare (1st ed.). Humanix Publishing LLC. (n.d.). Retrieved from http://obamacarefacts.com/affordablecareact-summary.php Read More