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Today, an opinion piece in the Wall Street Journal misstates many provisions of the Affordable Care Act and fails to mention the many ways the new law will improve our health care system for small business owners and their employees. Here are the facts:
Bringing Down Costs, Reducing the Deficit
Without reform, health care costs will continue to crush business and government budgets. The Affordable Care Act reverses this trend. Americans buying comparable coverage to what they have today in the individual market would see premiums fall by 14 to 20 percent. The total cost of care provided to Americans who get their insurance through the workplace could fall by as much as $3,000 a person and lower costs will make it easier for businesses to provide quality benefits to their employees. And the Congressional Budget Office has also confirmed that the Affordable Care Act will reduce the deficit by more than $100 billion by the end of the decade and lead to even greater deficit reduction in the next decade.
Cost Reduction and Tax Credits for Small Business
An estimated 4 million small businesses nationwide could qualify for a small business tax credit this year, which will provide a total of $40 billion in relief for small firms over the next 10 years. These tax credits are specifically targeted to the small firms that find it hardest to provide insurance to their workers. Qualifying for the credits isn’t difficult, nor does it require small business owners to fill out a long series of new forms. You can learn more about the tax credits here.
But tax credits aren’t the only way small businesses will benefit from the Affordable Care Act. A number of reforms in the new law will bring down premiums and health care costs for all Americans. Those reforms include rewarding providers for providing high-quality care and fighting waste, fraud and abuse. The new law also gives small businesses access to Small Business Health Options Program (SHOP) Exchanges. Currently, small businesses pay 18 percent more in premiums and higher administrative costs than large businesses. SHOP exchanges will expand the purchasing power of small businesses and the Congressional Budget Office has confirmed that they will help drive premiums down.
Requiring Insurance Companies to Pay Their Fair Share
Under the Affordable Care Act, insurance companies will have access to millions of new customers, many of whom will receive support from the federal government to purchase private insurance. With insurance companies reaping such a substantial benefit, it’s only right for them to pay their fair share and do their part to reform and improve our health care system. An analysis of the impact of reform legislation on insurance premiums by the Congressional Budget Office found that the impact of insurance industry fees on small firms would be “modest,” and that even after accounting for these fees, small group plans will face lower premiums to purchase health insurance coverage.
Beginning in 2013, the new law includes provisions requiring new information reporting on the purchase of certain goods. Some in the business community have expressed concerns with this provision and the IRS is looking for every way to minimize any burden on businesses and avoid duplicative reporting. For example, the IRS has already indicated that transactions done with a credit or debit card will be exempt from this provision, so whenever a business uses a credit card for a purchase, there will be no reporting requirement under the new law. The IRS is working diligently to answer questions on this provision and will consider alternate approaches and continue to seek out input and comments from small businesses in the weeks and months ahead.
The Bottom Line
The Affordable Care Act will bring down costs and improve health care for all Americans – including small business owners and their employees. You can learn more about the benefits of the new law for small businesses by clicking here.
Stephanie Cutter is Assistant to the President for Special Projects