Tutorial Part II : The Affordable Care Act and Small Businesses

If Your Business Employs Fewer Than 50 People You Are Exempt From Having to Offer Health Coverage

The Takeaway

1) Small businesses receive preferential treatment under the Affordable Care Act.  If they have fewer than 50 employees they don't have to provide their employees health insurance.

2)  For small business owners wanting to offer their employees coverage, the states' new Insurance Exchanges will make it easier. Exchanges have been designed to simplify comparison of rates and services.

3) A lot of small businesses will get tax credits for covering their employees. They have to have fewer than 25 workers making an average of $50,000 or less, contribute at least half of the cost of the plan, and use the Insurance Exchanges. If they meet these criteria, non-profits will receive a 25% credit this year. For-profit businesses will do even better. They can claim a 35% tax credit for their part of the premium.

4) Really small businesses, those with fewer than 10 employees, whose full-time workers average $25,000 or less, can get a 100% tax credit on their contribution to employee coverage.

5) Next year the tax credit goes up. For-profit companies will be able to claim up to a 50 % tax credit on plans offered through the Exchanges.

The One Minute Summary

There has been a lot of talk in the media about the impact of the ACA on small businesses, but the overall effect looks to be positive. The Act will help keep workers healthy and the coverage is subsidized. To qualify for tax credits businesses need to obtain their health plans through the Exchanges. Most large companies already offer insurance so little will change for them. Companies who are worried about the effects of the ACA tend to be large and to have many low-wage workers. They are going to be required to offer full-time employees (over 29 hours) insurance or face fines.

Go to the Source: Health Insurance 101
By Community Catalyst & Georgetown University Health Policy Institute

US Spends More Than Any Other Nation On Healthcare But Is Outranked On Life Expenctancy

Source: Gapminder.com

US citizens have a lower life expectancy at birth than citizens born in any European country, despite having the highest rate of health care spending.   

You probably already knew this. But did you know that you can now present this information in a visual form that is colorful, simple to grasp and interactive? Credit the nonprofit organization, Gapminder, created by Hans Rosling. It created a site with the map above and lots of others on global health and development. They are free to use and the site includes tutorials that make them easy to work with, even for novices. Educators will particularly appreciate the section on how to integrate the map projects and activities into the classroom.

Tutorial: A Quick and Dirty Guide to the Affordable Care Act (Obamacare)

Part 1:  Seven Ways the ACA Is Expected to Reduce the Federal Deficit

The Takeaway

The Congressional Office of Management and Budget (OMB) projects that Obamacare will shave $140 billion off the federal deficit in its first decade, and over one trillion dollars in the decade after that. There are no drastic cuts, instead, a number of incremental cost-savings measures have been put together which are expected to add up over time. Some of the most important ones:

1) A 40% excise tax on high-cost health care plans (so-called Cadillac plans). The idea is to reverse the perverse incentives now in place that encourage over-utilization, and shift consumers to lower-cost plans. High-cost plans will be defined as costing over $10,200 for an individual, or $27,500 for a family, in 2018.

2) An increase in Medicare payroll tax by .9%.

3) New excise taxes on pharmaceutical companies, health insurance companies and medical device makers.

4) A reduction in the inflation adjustments for Medicare payments to hospitals.

5) A reduction in payments to Medicare Advantage (the private alternative to Medicare for seniors).

6) Small businesses (under 100 employees) are actually expected to save money on health insurance and pass on those savings to their employees in the form of higher wages. Those wages would then be taxed, providing the government revenue. [This one sounds optimistic to me.]

There are also number of experimental projects included in the legislation that aim to save money by reducing the amount spent on inefficiencies such as medical mistakes, or treatments that don't provide benefit.  These measures include:

• Creation of Accountable Care Organizations (ACOs) designed to improve the efficiency and delivery of care
• Creation of an Independent Advisory Board to oversee Medicare payment reductions in the event that expenditures exceed guidelines
• Replacing fee-for-service payments with bundled payments 
• Creation of the Patient-Centered Outcomes Research Institute to study comparative effectiveness of medicines, tests and procedures

Read the reports: Impacts of the Affordable Care Act: How Reasonable are the Projections? (free)

by Jonathan Gruber for the New England Center for Economic Research

Despite Criticism, The Affordable Care Act Does Much to Contain Health Care Costs (free)
by Stephen Zuckerman and John Holahan at the Urban Institute