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The Health Insurance Agenda Is Changing: What Business Owners Should Know

Over the last few years, the story of the Affordable Care Act – more popularly known as Obamacare – has had many twists and turns. After the failure of the 2017 “Skinny Repeal” bill, it seemed certain the ACA was here to stay. However, the Supreme Court is now hearing a case against it, initially backed by the Trump administration.

The election of 46th U.S. president Joseph R. Biden in November represents another big plot twist.

Many successful entrepreneurs and small business owners have taken issue with provisions of the ACA during its decade of service. Because of its income limits, 1099 contractors with lucrative businesses are often left out of the Advance Premium Tax Credit (APTC), a subsidy that helps make policies more affordable.

President Biden has made protecting and building on the ACA a major part of his official platform.

This has left lots of business owners wondering what’s next and how they should prepare.

On some days, news about health insurance is coming in so fast it could make your head spin. The outcome of all these efforts won’t be known for some time, but it’s a good idea for business leaders to keep an eye out. In the world of employee benefits, health insurance looms largest – and often costs the most of any perk.

Here’s what we know so far about the Biden healthcare strategy and how it affects health insurance.

Biden Cannot Eliminate All Healthcare Debt With The Stroke Of A Pen …

Healthcare debt is involved in about 66% of all U.S. bankruptcies, making it the factor cited more than any other in a bankruptcy proceeding. The ACA’s impact on this issue has been more modest than hoped for: Even with insurance, severely ill Americans may not hold sufficient coverage for all the care they need.

Along with unprecedented rates of student debt, this has led to a broad reassessment of the role of debt in weakening the prospects of an economic recovery. Some observers have encouraged Biden to take action on medical debt through executive order, but it seems unlikely this will be his preferred approach.

Experts are generally lukewarm on the idea that an executive order can have a substantial effect on Americans’ medical debt. Private parties such as healthcare providers and collection agencies hold many millions of dollars in such debt, while presidential authority extends mainly to debts owed to the federal government.

Unwinding private medical debt is unlikely without a plan to compensate those who benefit from it.

… But He Can Open Up ACA Health Insurance For More Enrollments

As early as 2017, the Trump administration cut millions from the ACA budget used for public outreach. With little to no advertising in states across the country, many eligible Americans were simply not aware of the open enrollment period for ACA health insurance. It falls between November 1 and December 15.

With the fall of the individual mandate, some surely thought ACA health insurance was no longer valid.

President Biden has taken steps to counteract these misperceptions and provide health insurance options for Americans who lost coverage more recently in the course of the pandemic. An additional open enrollment period will last for 90 days starting on February 15, enabling all eligible adults to sign up for policies.

While Americans who lose workplace-based coverage are eligible for a special enrollment period, this window only lasts about 60 days from the qualifying event. People may lose the opportunity to switch to ACA health insurance by missing the deadline or by failing to submit the necessary documentation for special enrollment.

Because of continuing job losses, analysts anticipate ACA health insurance enrollment will rise.

Nearly 29 million non-elderly Americans had no health insurance in 2019. Statistics from 2020 are not yet available, but it is already known that job losses in 2020 were the worst since 1939. Millions more people may be represented on ACA health insurance rolls than in previous years.

Biden is expected to support restoration of the individual mandate, so holding health insurance may have positive tax consequences in coming years for those who might otherwise be uninsured.

The Federal Government May No Longer Support De Facto Health Insurance Repeal

The Texas v. California arguments now unfolding before the Supreme Court were envisioned by some as a de facto repeal: The Supreme Court would strike down the ACA on technical grounds and invalidate the whole law.

That would also render all related health insurance rules and regulations void.

This was always a possibility, although perhaps not the most likely one. The Supreme Court has a number of legal tools for responding to any particular provision of the Affordable Care Act found to be unconstitutional. Complete elimination of the law is among the more extreme options.

Now, it seems further away than ever – for more reasons than one:

  • Justices’ responses to oral arguments indicate little appetite to strike down the whole law
  • The Biden administration may choose to withdraw the existing federal support for the case

The direction of federal policy has changed substantially since November, so it might seem obvious that the Biden Justice Department would no longer argue, essentially, for repeal. But the workings of the government can sometimes be surprising, and this is a counterintuitive situation.

In effect, some court-watchers have advised Biden to make no change.

Precedent dictates that “the bar should be high” for changing the federal government’s position before the Supreme Court in the middle of a case. But there is a caveat, since the Justice Department’s conventional role is to defend federal laws before the court.

Incoming Justice Department leaders therefore have some leeway, even though the Trump administration advocated for the court to strike down the ACA. The Department could file a new legal brief outlining a change in its position, and a second hearing would not be required.

It may be a bit of an embarrassment from a protocol standpoint, but it is now more likely than not.

That would further weaken the chance that ACA health insurance will be going away in 2021.

How Savvy Business Leaders Should Respond To The Latest Health Insurance Moves

Any way you look at it, “wait and see” on health insurance is over. Now is the time to act.

Structural change in how America handles health insurance is unlikely to materialize in the first half of the Biden administration – and those efforts could be severely curtailed in 2022. But what is clearer than before is that ACA health insurance is unlikely to disappear. It may even be expanded in some ways.

The proposed return of the individual mandate also means those who don’t hold health insurance could be penalized. Entrepreneurs and business owners who have not qualified for ACA health insurance subsidies in the past should not expect to go forward, so the need for an alternative will be more urgent than ever.

To find out about health insurance alternatives to Obamacare that work for you, contact us.