According to an article in the New Yorker, 96% of small business in the US have fewer than 50 employees, and I’m aware that the employer mandate of the new healthcare law doesn’t touch this group. However, I do know some of these businesses who currently offer health insurance to their employees and was wondering if you anticipate they’ll ask their employees to switch to Obamacare as an alternative?
The best way to answer your question is by asking ourselves why these businesses offered insurance in the first place, when they didn’t have to. Based on my experience there are two major reasons.
The first is to be competitive with larger employers in attracting and retaining talented employees.
The second reason is that a business owner usually wants insurance for themselves and their family. It’s common knowledge that coverage through a group plan is cheaper than buying individual insurance, so offering a plan is beneficial to the owner well as the employees.
So, will these reasons be relevant in a few years? Let’s fast-forward to possible future scenarios. Let’s say that in 2015 it’s not a big deal if a small employer (under 50) doesn’t offer health insurance, because you can now buy reasonably priced health insurance on the exchange. Therefore, absence of insurance isn’t a negative factor when deciding to accept a job offer. (Reason #1, is no longer relevant.)
Then, let’s say that in 2015 the business owner can also buy health insurance for themselves and their family on the exchange. (Reason #2, is no longer relevant). Under those ideal scenarios, I could see small employers pushing for a switch to Obamacare. But realistically, I don’t see that happening anytime soon.
What I do see happening much sooner is those small businesses benefiting from no longer being subject to “experience rating”. This generally happened when younger employees (unmarried, male) would opt-out of insurance at work. This made the insured pool consist disproportionally of women, and sicker or older workers. This riskier pool hurt small business that commonly saw their premiums skyrocket if an employee or dependent became seriously ill. The new law requires “community rating” for small businesses, so insurance companies can’t charge more because a business has employees with higher health costs.
Admittedly, this is all speculation. Only time will tell how the law will affect the workplace once it’s implemented. Keep your fingers crossed.
© Copyright Eva Del Rio
