By Peter Pratt, President, Public Sector Consultants
Whether you agree or disagree with the United States Supreme Court upholding the Patient Protection and Affordable Care Act (ACA), also known as Obamacare, you have a stake in what comes next. Now we can focus on what the law does and doesn’t do, something that has been lost in the haze of partisan assaults.
The law’s extraordinary complexity masks many of its salient features, which combine taxes and subsidies to individuals and employers. Most individuals are required to purchase health insurance or pay a penalty, starting in 2014. But there are also exemptions from the tax if your premium is more than 8 percent of your income. And individuals can receive significant subsidies to help pay for health insurance.
The tax-and-subsidy combination applies to businesses as well. All job providers with fewer than 50 employees are exempt from having to offer coverage. The smallest businesses, with 25 or fewer employees, are (and have been) eligible for subsidies to help cover the cost of coverage that they offer voluntarily. These subsidies have helped many Michigan businesses. But, yes, starting in 2014, companies with 50 or more employees must pay a tax of $2,000 per employee if they do not offer coverage. Right now, the overwhelming majority of businesses of this size offer health insurance to their workers. The question is whether they will continue to do so when the employees will be subject to the individual mandate and the cost of the penalty is much less than the cost of coverage to the employer.
This dance of taxes and subsidies prompts a question that has plagued our health care system for decades: Should people with health insurance pay for those who do not have it? It is no secret that those with health insurance pay—according to one estimate $1,000/year as part of their premium—for the care of people without insurance. Sooner or later, most Americans use health care. Shouldn’t we all pay for our own care? ACA begins to address this matter through its combination of taxes and subsidies, and its requirement that the vast majority of Americans participate in one way or another.
ACA also establishes health insurance exchanges, where small businesses and individuals can purchase coverage. This is firmly a market-based solution to the issue of inadequate information and competition among health insurers. Governor Snyder has pushed hard for such an exchange in Michigan—the MI Health Marketplace. This exchange has enormous potential to give businesses and individuals clear and comparable information about health insurance that will foster competitive, affordable options. The upholding of the ACA should break the logjam in Michigan around the establishment of the exchange.
The ACA focused on covering a good number of the more than one million uninsured in Michigan. Even with the tax on some individuals who do not have health insurance and the expansion of Medicaid (which the Supreme Court did limit), many will remain uninsured. And the ACA does far too little to control the inexorably rising cost of health care. With today’s Supreme Court ruling, however, we can move ahead as a state and a country to address the nettlesome issues surrounding health care.
View this article on MLive.com (posted 6/30/2012)