By now, most Americans have heard, read or seen something about the impact of the (un)Affordable Care Act on the small-business community. Meanwhile, a new paper from The American Health Policy Institute looks at how big business is faring. Combine those two different perspectives — that of both small and large businesses — and one might reasonably predict the same future, one where Americans can no longer look to their employers for health insurance.
Research by my former employer, the National Federation of Independent Business, shows that those small employers who currently offer health insurance to their employees are experiencing devastating premium cost increases. They’re trying to cope with costs through a number of measures, but if you talk to some of these small employers — which I did frequently when I worked for the federation — they will confess they don’t know how and whether they will continue to be able to offer health insurance to their employees for much longer.
The American Health Policy Institute's paper, by Tevi Troy and Jeffrey McGuiness, takes a look at what chief human resource officers at large companies are seeing, post-Affordable Care Act, including their thoughts on what their companies might do with employee health benefits over the long term. Guess what? Turns out big employers aren’t particularly happy with the impact of the law, either. Cost is on their minds, just as much as it is on the minds of small-business owners. And they’re already thinking about what they can do as costs continue to exceed the rate of inflation. Some are thinking about switching to a “defined contribution” approach, where an employer gives the employee money to purchase health insurance on their own.
With both small and large employers feeling cornered by costs that are out of control, one can easily see a future where employers get out of the health care business completely (perhaps to the point where larger firms will actually choose to pay the fine associated with the employer mandate rather than be saddled with exploding costs), leaving most individuals to shop in the exchanges and choose their own plans.
I believe this is the actual goal of the health care law — to push people into “government health care" – but something else could happen that surprises the law's architects. When more and more people become exposed to the cost of health care, from insurance premiums to actual goods and services, through an individual marketplace, instead of being insulated and separated from those costs by their employers, more and more people are likely to be very, very angry about out-of-control costs. They might even revolt and demand change.
What if the Affordable Care Act means the end of employer-provided health insurance ... and the beginning of a real health care revolution? For free-marketeers like myself, the irony would be delicious.
Corrected on May 29, 2014: The original version of this post misnamed The American Health Policy Institute.