Quote-of-the-day mailing list
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Subject: qotd: Small business owners under the Affordable Care Act
Date: Mon, 1 Oct 2012 11:06:47 -0700
From: Don McCanne <firstname.lastname@example.org>
To: Quote-of-the-Day <email@example.com>
Kaiser Family Foundation
Health Insurnace and Reform
September 28, 2012
How Small Business Owners Get Health Insurance
By Larry Levitt, Anthony Damico, and Gary Claxton
As with any economic policy issue, there has been much discussion of how
the Affordable Care Act (ACA) will affect small businesses. But, there's
been very little focus on how the health reform law will affect the
owners of those businesses as people.
As our recently released Employer Health Benefits Survey shows, small
businesses are much less likely than larger businesses to offer health
benefits to their workers. Half of businesses with 3-9 workers and 73%
of firms with 10-24 workers provide health insurance. That contrasts
with 98% of firms with 200 or more workers that offer health coverage.
The workers in these firms that do not offer coverage must rely on
employer-based insurance through a family member, buying insurance in
the individual market (assuming they can afford the coverage and do not
have a pre-existing health condition), or in many cases going uninsured.
But what about the owners of these small businesses? They're pretty much
in the same boat.
A few striking things emerge from this analysis:
• About one in four small business owners is uninsured, roughly the same
as for non-elderly adults generally.
• Just 40% of small business owners get job-based insurance, either from
their own job or through a family member. In contrast, almost six in ten
non-elderly adults get their insurance through an employer.
• Small business owners rely heavily on the individual insurance market,
with 30% of them buying "other private insurance" (the vast majority of
which is coverage purchased in the individual market).
This suggests that the biggest effects the ACA will have on small
business owners may not be changes in the rules for the small business
insurance market, but rather the changes in the individual insurance
market: guaranteed access to coverage and no premium surcharges for
people with pre-existing health conditions, limits on how much premiums
can vary by age, a requirement that all insurers cover a set of
"essential" benefits, the creation of health insurance exchanges, the
requirement to be insured, and tax credits to make premiums more
affordable. In fact, an estimated 60% of small business owners now
buying insurance in the individual market have incomes up to 400% of the
poverty level and would be eligible for tax credits in exchanges or
Medicaid, and 83% of owners who are now uninsured would be eligible for
subsidized coverage (split about equally between tax credits and Medicaid).
It may be that we can gain more insight into the implications of policy
issues like health reform for small business by focusing less on the
businesses themselves and more on the people who own them.
Census tables on firm sizes, receipts and payrolls:
Comment: In both policy and political debates, small business owners
have been separated out for special attention as "job creators" who
should not have to pay higher marginal income tax rates on the portion
of their incomes over $1 million. This deceptive framing that falsely
suggests that they are the primary drivers of our economy masks the fact
that most small business owners have very modest incomes and are heavily
dependent on the dysfunctional individual insurance market, and
one-fourth of them aren't even insured.
Over three-fourths of firms have no payroll, so these represent
self-employed business owners, presumably with very modest incomes on
average (see Census link above). Of firms with payrolls, over half have
total receipts of less than $100,000 which is used for payrolls, all
other business expenses, and the net income of the business owner. Most
small business owners do not fall into the prototype "job creators" that
the politicians keep talking about.
They have a problem with health insurance. This Kaiser reports shows
that many of them will benefit from the improvements in the individual
insurance market that are required by the Affordable Care Act. But, as
we have shown many times in the past, these plans will still have
unaffordable premiums and unaffordable out-of-pocket costs, even with
the subsidies to be provided by the Act. Many of them will remain in the
ranks of the uninsured, estimated by the CBO to be 30 million people.
The Affordable Care Act will not meet the health care needs of far too
many small business owners.
Our small business owners deserve what all of us deserve: an affordable
health care system that takes care of everyone - an improved Medicare