Eight years ago, small-business owners were given many promises about the Affordable Care Act: it would drive down costs; it would allow them to take advantage of new tax credits; and new exchanges would give owners and employees new options to purchase coverage.
By the time President Barack Obama signed the bill, it was abundantly clear that the law would do more to harm to small businesses than help them.
Small-business owners, through the National Federation of Independent Business (NFIB), fought the law on constitutional grounds, taking the case all the way to the Supreme Court. Unfortunately, a narrow majority on the court rescued the law and its small punishing mandates and taxes.
Health-insurance costs remain the number one concern of small-business owners in NFIB's Problem and Priorities survey, the same place they've occupied in that survey for 30 years now. Only a handful of small businesses ever qualified for temporary tax credits, which ended last year. The vaunted exchanges for small businesses never really materialized.
It's long past time for a do-over, for Congress to repeal and then replace the Affordable Care Act.
Small businesses need affordability, flexibility, and predictability in the health-insurance market. The bill recently introduced in Congress, the American Health Care Act (AHCA), is a good first step that makes progress on all three of those fronts.
The Affordable Care Act, or Obamacare, was perfectly misnamed. It failed entirely to make insurance affordable for small-business owners and millions of other Americans. In fact, the many taxes imposed by Obamacare drove costs up. Small-business owners were hit with higher payroll taxes, taxes on health-insurance products, the employer and individual mandate penalties, and the Cadillac tax.
The AHCA eliminates most of these taxes and delays the implementation of the Cadillac tax for a number of years. That's good news for small employers, especially in Pennsylvania, where small businesses employ 2.4 million people, or about half the workforce.
There wasn't much flexibility in Obamacare for small businesses. Very few states set up the promised small-business health insurance exchanges and the few existing exchanges didn't offer arrangements that weren't available before the law. In fact, the law ended up eliminating the ability of small businesses to contribute to their employees' health insurance in the individual market. It took bipartisan legislation last year to keep small-business owners from being fined for helping in this way.
The AHCA improves flexibility in health-care arrangements by boosting health-savings accounts. Small businesses have long appreciated this method of saving for future health-care expenses.
Obamacare also made the health-insurance market highly unpredictable for small businesses. Many NFIB members had their plans canceled. Some of them have been forced to switch plans multiple times since the law was signed.
Small-business owners don't want to go through another period of uncertainty. The AHCA contains a stabilization fund that should help insurance companies navigate changes in the markets and ensure that businesses and individuals can maintain coverage.
The AHCA is a good start, and we hope that congressional leadership and the administration keep their promise to do much more. Congressional leaders have promised additional reforms aimed at creating more options, more competition, fewer mandates, and lower costs. Those reforms will come in phases. Passing any of them would be nearly impossible unless the AHCA is passed first.
President Trump has also said that his secretary of Health and Human Services, Dr. Tom Price, will use his power to make changes that could improve the affordability of health insurance.
Small-business optimism has soared since the election because small-business owners believed Washington would act on their priorities. If lawmakers in Washington want to see small businesses thrive, they need to repeal a huge impediment to growth and make real progress on health-care reform.