Background: Passed back in 2010, Obamacare made dramatic changes to the health insurance industry giving the government unprecedented control over health insurance companies, individuals, and businesses. The federal government now has the authority to force individuals to buy health insurance, force employers to provide health insurance to their employees, and regulates what kind of health insurance is legal.
While the stated intended goal of Obamacare is to make healthcare more affordable and more abundant, the outcome has been far different. Obamacare has caused millions to lose their plans and doctors, failed to lower the growing cost of healthcare, raised the cost for businesses to operate and grow their companies, and increased taxes and compliance cost on employers and families.
Rising Healthcare Costs: While campaigning for president, candidate Obama promised to enact healthcare reform that would lower a typical family’s health insurance premium by up to $2,500 a year. Instead, under Obamacare, premiums skyrocketed for those receiving health insurance on the individual market and those receiving insurance from an employer. According to one study, average 2016 health insurance premiums on the individual market are rising in nearly every state, 17 of which face premium increases of 20 percent or more. According to another report, by the Congressional Budget Office (CBO), average premiums for employment-based coverage will increase by 60 percent over the next 10 years. Paying for employee health insurance is a significant cost to employers. Obamacare has increased this cost.
Restricting Growth: Central to Obamacare is the employer mandate. This mandate forces businesses with 50 or more full-time employees to provide health insurance to their workers or pay a fine of $2,000-$3,000 per employee. The effect of this is twofold. First, it discourages businesses from hiring full-time employees. According to a small business health care survey, 34 percent of small businesses are holding off hiring new employees because of Obamacare. Second, the employer mandate encourages business to fire full-time employees or move them to part-time work. According to that same survey, 12 percent of small businesses had to lay off workers due to Obamacare. The CBO reported that Obamacare would reduce American work hours by an equivalent of 2 million jobs over the next decade.
Increased Taxes and Compliance Costs: Contained within Obamacare is a trillion-dollar tax hike on employers and families. This includes a roughly 2.5% excise tax on health insurance premiums that exclusively hurts small businesses since large firms self-insure and do not pay health insurance premiums; a 2.3% tax on medical device manufactures; a “Cadillac tax” on high-cost plans; a 0.9% increase in the Medicare payroll tax; and a new 3.8% Medicare surtax on unearned income (capital gains and dividends) for high-income earners that will apply to “flow-through” business income earned by small businesses.
In addition to new taxes, Obamacare dramatically increases compliance costs. The law adds over 40 million hours of paperwork to individuals and business owners every year. Small businesses have already reported spending on average 13 hours and $1,274 per month on Obamacare compliance.
Solution: The combination of higher premiums, the employer mandate, and new taxes and compliance cost in Obamacare all work to raise the cost of labor, prohibit business expansion, and reduce job opportunities for American workers. Congress should fully repeal Obamacare and enact patient-centered, market-based health care reform that empowers individuals, families, and businesses to determine and purchase the health insurance that’s right for them.