Debate continues on impact of health care act

The nation’s health-care reform act – known officially as the Patient Protection and Affordable Care Act and as “Obamacare” by its critics – just marked its one-year anniversary in March.

Everyone probably remembers the act had an extremely difficult birth, with more than a year of fierce debate over what should and should not be in it. The act finally passed on a party-line vote, with only one Congressional Republican voting for it.

Challenges to the new law were immediately filed by Republican state attorneys general, including Colorado’s own Attorney General John Suthers.

Several lower court opinions have been issued in the last year, resulting in a fairly even split between those upholding the new law and those saying it is unconstitutional. A hearing by the U.S. Supreme Court could come as early as late this year.

Meantime, the debate rages on as to whether the health-care reform law is good or bad for business, especially small businesses that have been struggling to provide insurance coverage for their employees in recent years in the face of ever-rising premiums.

One small business group that definitely isn’t sitting on the fence is the National Federation of Independent Businesses, which has joined in the lawsuits. Tony Gagliardi, director of NFIB’s Colorado chapter, said there’s no doubt that the law hurts business.

“Businesses are still getting hit with 20 to 40 percent increases in their health-care costs, and the act has done nothing to stop that,” he said. “What we have seen is small business is not receiving any kind of benefit from the act.”

Probably the biggest benefit supporters point to in the still-unfolding act is the small business tax credits that went into effect last year. Until insurance exchanges are up and running in 2014, small businesses with fewer than 25 full-time employees that contribute at least 50 percent to the total insurance premium are eligible for a tax credit of up to 35 percent of the employer contribution for employees averaging less than $25,000 in annual wages.

The tax credit is less for higher-paid employees and phases out at those earning $50,000 per year.

Gagliardi maintains the tax credit portion of the bill has little effect on small business employers. “We figure that only 12 percent of businesses will qualify for any part of the tax credit,” he said.

But that’s not what the California-based Small Business Majority is saying. Founder and spokesman John Arensmeyer said a study by The Lewin Group showed of the 99,700 small businesses in Colorado, 82,400 – or 82.6 percent – are eligible for some portion of the credit and 24,500 small businesses are eligible for the full credit.

“Ultimately, the biggest single problem facing small business is the cost of health care,” Arensmeyer said. “We found that when you explain the tax credits to small business, 33 percent who are not offering coverage say they would use them and another 33 percent who are offering coverage say they would (use them).”

Arensmeyer said there remains a great deal of confusion and misinformation about the law one year after its adoption, and uncertainty about its long-term future. But he doesn’t see the lock-step opposition to the law by business that some might want to portray.

“The businesses we talk to across the country are not lining up to advocate for repeal,” he said. “If you look at everything together, there’s a lot more good for small business than harm.”

Meanwhile, Gagliardi says the law is simply failing on every level. “We’re all seeing (health-care premium) increases, and (the act) has done nothing to attack the real cause, which is the rising cost of health care,” he said. “This is not health-care reform, it’s insurance reform.”

Gagliardi said a better alternative is to scrap the health-care act and let states independently address insurance reform through state divisions of insurance. “NFIB is confident and hopeful that this act will be overturned by the Supreme Court. That’s why we maintain full standing in the lawsuit as the only business organization to do so.”

Arensmeyer said he’s not sure why there is such a strong divide in the business community about the health-care act. “These issues seem to be very ideological,” he said. “The fact is the problem wasn’t resolving itself and needed to be fixed.”

Arensmeyer notes that the insurance industry was not removed from the health-care discussion by the act and will continue to play a large role in its implementation.

“We firmly believe the system has to work for the insurance companies as well,” he said. “If you don’t get insurance companies willing to sell in an exchange, it’s not going to work. This (act) was simply a way for the government to play a role and do it within the free market system.”

Steve Porter covers health care for the Northern Colorado Business Report. He can be reached at 970-232-3147 or at sporter@ncbr.com.

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