Affordable Care Act Repeal 101 For Small Businesses & The Self-Employed

Affordable Care Act Repeal 101

Editor’s Note: Almost Millions is a non-political website that focuses on money education for freelancers and the self-employed. But no matter whether you voted for Clinton, Trump, or anyone else, the possible repeal of the Affordable Care Act (also known as “Obamacare”) has serious consequences for millions of self-employed workers and small businesspeople across the United States. Melissa Bertoncini is a bookkeeper who runs New York’s In The Black MGMT, and has some details on what could follow the repeal of the Affordable Care Act:

Prior to the Affordable Care Act (ACA), there was literally no competition in the open market, especially if you were a small business owner or a single payer. Just the same as with airlines and other monopolized sectors, healthcare companies all came to an agreement that no one would charge less than X. This meant that, as a single payer or small business owner, you were looking at anywhere from $700-$1300 per person per month for health insurance.

What Affordable Care Act Repeal Might Mean For The Self-Employed, Small Businesses & Freelancers – The Cost Of Health Insurance

How do I know this? I have been a bookkeeper for almost 15 years in New York City. My practice works exclusively with small businesses and averages 20-30 clients at any given point in time. As part of my work, I do health insurance renewals regularly. I also review all of the policies offered comparative to the costs and help my clients make the best decisions financially, while at the same time getting the best coverage for their employees.

When the ACA came out, insurance companies were forced to cover things they never covered before. For example, if you went to the doctor and needed an antibiotic, your insurance probably covered the visit minus a co-pay. Say the co-pay is $40. But then you get a prescription, and your policy does not cover prescriptions. So now, this name brand drug that your doctor is being paid to push on you from the pharmaceutical company is $80. You can’t afford that, so you never get the medicine. Now you are sicker, longer because you can afford the diagnosis but not the “cure”. The ACA eliminated that and made it mandatory that this be included.

What Affordable Care Act Repeal Might Mean For The Self-Employed, Small Businesses & Freelancers – Insurance Issues

How did the insurance companies respond? They sent letters to their customers (I saw many of these letters) stating that they were increasing premiums by 20-25% because of the ACA. Was that true? Not really. The health insurance industry is a multi-billion dollar industry. The generic drug that costs $8 doesn’t justify a 20% increase to a $750/mo premium (prescriptions were one of the reasons stated). However, by sending those letters, they made small business owners and single payers feel angry at the ACA instead of at the insurance companies themselves. They blamed the ACA for making them do what they should have been doing all along.

Affordable Care Act Repeal 2

What Affordable Care Act Repeal Might Mean For The Self-Employed, Small Businesses & Freelancers – Cheaper Premiums Under Obamacare May Disappear

My second point is that insurance has always been a situation where the more people on the policy, the less the premium per person. That’s why professional employer organizations (PEOs) exist. Many payroll companies like ADP and Paychex offer this. PEOs offer opportunities for a small business with three employees to access rates normally offered to companies that have 10,000 employees. Purchasing insurance in bulk, along with every other member of the PEO, gives greater purchasing power. Essentially, a PEO gives a small business access to prices that, say, Xerox pays. ACA provides that same opportunity.

What Affordable Care Act Repeal Might Mean For The Self-Employed, Small Businesses & Freelancers – Strength In Numbers Disappears

If ACA was allowed to actually flourish, think about the buying power of 300 million people versus three or 30 or even 30,000. It was on a gradient system meaning that over time, more and more people would be obligated to join or purchase from the free market. The more people that participate, the more doctors will accept it. It’s a snowball effect. And when you have 300 million people paying in, premiums go down just like they would at any other insurance company.

My final point, and probably most important, is that all of these senators voting to repeal it receive healthcare for life; courtesy, partially, of your taxpayer dollars. All they have to do is complete one term of office. That is definitely something they are not repealing.

So, they should have health insurance but you shouldn’t. Makes sense right…or does it? They obviously see the importance of health insurance because they made sure to vote for health insurance for themselves and their families but not for you and your families.

I am not saying that the ACA isn’t flawed, but Oscar and other new insurance companies that offered more cost effective insurance options compared to Oxford or Blue Cross Blue Shield were born from it.

The ACA created competition in a market stagnated by lobbyists. It eliminated pre-existing conditions. The ACA is a really important piece of legislation and I think that if we want to live in a “civilized society” we should afford our citizens the basics; healthcare included.

Reference Materials:
Health Benefits Provided to Members of Congress and Congressional Staff
Earnings Reports Submitted to the SEC and Shareholders from UnitedHealthcare dated April 2016

Melissa Bertoncini has been a freelance bookkeeper since 2006. She owns a boutique bookkeeping and business management company called In The Black MGMT that works exclusively with small businesses in the creative fields. For the past 11 years, Bertoncini has helped her clients analyze costs and provide solutions to financial issues that all business owners face.