By Ryan Kh
Last year, Republican lawmakers successfully passed a bill that would repeal the Patient Protection and Affordable Care Act. President Obama vetoed the bill. Now that Donald Trump has seceded him, the Republicans will have a chance to pass their own version of healthcare reform.
The Republican healthcare bill will include a number of changes. Many of these changes President Trump and the Republicans in Congress are proposing will have a profound impact on small businesses. Here are some things all entrepreneurs should be aware of.
Healthcare Mandates Would Disappear
The ACA required all businesses with 50 or more employers to provide health insurance. The Republican bill would lift the employer mandate.
This would significantly ease the burden on growing businesses. Critics have warned that the Affordable Care Act would force companies with slightly over 50 employees to modestly downsize their workforce. While most of the projections didn’t pan out, a study from Kaiser cited evidence that more people shifted to part-time work after the ACA was passed.
The National Federation of Independent Business states that the Republican bill would be beneficial for businesses. The conservative think tank points out that health insurance costs has been the biggest concern weighing on small businesses for the past 36 years.
Age-based Healthcare Costs Would Vary Much for Employers
The ACA placed a cap on the premiums that insurance companies could charge according to age. The bill stipulated that insurance couldn’t charge more than three times as much for older members than younger ones. This helped stabilize costs for companies with more diverse workforces.
The Republican bill would reverse this provision. Insurers would not be capped at how much they could charge people based on age.
Mike Brey wrote an opinion piece in The Hill, which stated that costs would be much more of a burden for companies with older employees. It would also make it much more difficult for companies with employees of mixed ages to forecast costs.
“Small firms tend to rely on core employees who stay with one company for many years, which means small businesses would be disproportionately impacted by a system in which employers are punished for having a larger percentage of older worker. Those age-based penalties would be extreme. Under the AHCA, businesses would be charged up to 500 percent more for their older workers than their younger employees. Sadly, even firms with younger employees wouldn’t be safe from the rate carnage with overall health insurance premiums expected to increase 15-20 percent on average, according to the CBO.”
Of course, there are two sides to the coin. The Republican bill would be beneficial for companies with younger employees. However, this could also be a downside, because it could encourage age-based discrimination.
Most Taxes Will be Delayed or Eliminated
The GOP bill would eliminate most of the taxes imposed by the ACA. Some of these taxes were directly applicable to small businesses. It would also delay the Cadillac tax for top-tier health plans. This would be an encouraging change for businesses suffering from over-taxation.
Small Business Tax Credits Would Be Phased Out
The Affordable Act provides tax credits to companies with fewer than 50 employees. The GOP bill would phase out these taxes by 2020. This could put the smallest employers at a competitive disadvantage, since they would have difficulty purchasing many plans on the group markets for their employees.
The Republican Bill Would Have Both Negative and Positive Changes for Small Businesses
Many pundits on both sides have criticized the Republican healthcare bill. However, anyone that objectively studies the new law can see that it has created both positive and negative changes for small businesses. It is still too early to tell whether it will be a net positive or negative for them.
However, it is clear that the bill will affect companies differently. Businesses with fewer than 50 employees may be worse off, since they lose tax credits. Their larger competitors may be better off, since they will no longer be required to provide healthcare by law.
Ryan Kh is an experienced blogger, digital content & social marketer. Founder of Catalyst For Business and contributor to search giants like Yahoo Finance, MSN. He is passionate about covering topics like big data, business intelligence, startups & entrepreneurship. Follow him on twitter: @ryankhgb.
