Cover Story: Obamacare: This Might Hurt a Little
An examination of what the Affordable Care Act means to your business
Opting In, Up and Out
One of the effects of Obamacare will inevitably be higher enrollment in whatever plan a company provides, Tate believes.
The very nature of the policy encourages it, with the main driver being the individual mandate. Under the new law, every American is required to have insurance through some means as of Jan. 1, 2014, or pay a tax to the Internal Revenue Service. That tax amounts to $95 per year or 1% of modified adjusted gross income per individual next year, whichever is greater (up to a maximum of $285 per family).
In 2015, the tax rises to $325 or 2% of income per individual (maximum family penalty: $975). And in 2016, it scales up to $695 or 2.5% income per individual (maximum per family: $2,085). The government will likely collect the money by deducting it from people’s tax returns, Tate says.
The ultimate goal is to encourage people into preventive care. People who are insured are more likely to manage their health care better, heading off the likelihood of costly treatments later. It’s a strong argument, says Tate. Other countries with similar national policies spend far less on health care than the United States does.
Thornbrugh says QuikTrip—which not only offers health-care plans to fulltime workers but also has onsite wellness centers for any employee (and their families) and provides 30 different prescriptions free of cost—has already reaped the benefits of encouraging preventative care.
“The cost benefits are huge,” he says. “If we can catch a lot of problems or illnesses early, it not only helps the employee, but they get back to work quicker.”
While analysts expect millions will remain uninsured, even with the full implementation of Obamacare, most say these provisions will result in 95% of legal residents having insurance by 2016.
For employers offering health benefits, Tate says that day will have brought with it a surge in enrollment and increased costs.
The larger intent was to lower overall costs, but for businesses, that may not be the case. Tate says the law contains no cost-control provisions that will reduce health-care expenditures or hold down premiums in the short run. In fact, two independent studies of health-care spending and insurance premiums indicate both have continued to rise since Obamacare was signed into law in 2010.
In 2011, spending on health care rose 4.6%, up to $4,547 per person on average, says Tate, citing the nonpartisan Health Care Cost Institute. It rose again in 2012 by a similar amount and was projected to increase by about the same level in 2013. In terms of employer-sponsored insurance, an individual policy averages about $5,884, with the individual’s share $999 and the employer’s $4,885, according to the latest projections.