The elimination of ObamaCare and the now-incoming TrumpCare stands to significantly impact all but the smallest businesses. Some of these changes will improve health insurance access for businesses, while others may be more challenging and could require additional time for implementation.
Understanding the differences between the potentially incoming TrumpCare and ObamaCare isn’t easy; even the ACA was complex and unwieldy for human resource professionals at first. It may be tempting to leave adaptation until after the changes are actively implemented, but this could leave your business in a situation where employees aren’t covered or coverage becomes even more expensive.
In an effort to help you prepare as effectively as possible, we’ll break it down in a way that’s simple and easy to digest right here.
End of the Employer Mandate
One of the proposed changes Trump could make relates to the Employer Mandate. Former President Obama created this mandate in an effort to force high-volume employers to provide their employees with optional health coverage. While the original intention was to ensure that all people had coverage, costs associated rose swiftly for medium-to-large businesses that couldn’t necessarily afford to make such programs available. At least a handful of businesses went under shortly after, though it isn’t known whether or not the mandate was the cause or if other influences played a role in the closures, too.
So what will happen to your business if Trump deletes the Employer Mandate? If you have fewer than 50 employees, not much. The Employer Mandate only applies to businesses with 51 or more employees, so you can continue as you were, so to speak. But if your business has over 51 employees or will in the near future, you may find yourself suddenly freed of the responsibility to provide health insurance. That means no fines, either, should you decide that it’s not the right time to provide a group policy option to your staff. TrumpCare essentially respects the right of businesses to choose for themselves.
The end of the Employer Mandate could reduce costs, but don’t throw the baby out with the bathwater; there are good reasons to provide health insurance to your staff. Primarily, it ensures that your most valuable employees have access to healthcare when needed, meaning fewer sick days and less time away from the office. But it also makes your positions more attractive, helping you to attract the best talent possible. Putting an end to the employer mandate won’t change that, but it will give you the freedom to make the right decisions for your business at whatever stage it currently exists. That’s less worrying about how you’re going to make the finances work at a time in which even one wrong decision could be the tipping point for disaster.
End the Small Business Health Options (SHOP) Program
Some people believe that TrumpCare will also do away with the SHOP Program. This program was directly responsible for providing small businesses with scaled-back versions of premium health insurance plans used by large-scale employers. Its main goal was to make it more affordable for small businesses to provide insurance to staff members, but sadly, the costly program ended up underutilized and seemingly unnecessary. It was a bit of an exercise in futility given that businesses that qualify as “small” (under 50 employees) weren’t required to provide insurance options anyway.
That said, at least a small portion of businesses did, in fact, access and use the program. Mom and pop shops and small-time offices struggling with funds seemed to flourish with the program, and may struggle if it’s taken away. Ultimately, if your business is small, you will need to make a decision whether to step up your offerings or remove the option for health insurance altogether.
Small Business Healthcare Relief Act Might Finally Pass
The Small Business Healthcare Relief Act hasn’t yet passed into official legislation, but it does have significant support from all sides. This act would essentially exempt the smallest businesses from needing to pay hefty penalties associated with the Health Reimbursement Account (HRA).
The HRA specifically exists to provide a backup method for covering out-of-pocket health expenses when incurred by employees. It is essentially an additional layer of insurance protection for employees, but can be very costly for small businesses who may be in ramp up or close to the red already, and much of the benefit of having it in the first place was through tax breaks and credits rather than direct savings.
For larger businesses, this makes sense; it allows them to indirectly save money on health insurance offerings. But for a smaller business that may only be making, say, $500,000 a year, the tax break simply wouldn’t add up to as much. Thus, it isn’t effective for small businesses.
Currently, if businesses do not provide this additional layer of coverage, they can be held accountable through tax penalties. For the smallest of businesses even a tiny penalty can be enough to create financially difficult scenarios. The Small Business Healthcare Relief Act would exempt the smallest subset of businesses from needing to follow the HRA. While they wouldn’t receive the tax break, they wouldn’t be at the mercy of expensive penalties, either. For new startups, that could be the difference between high capital and more reasonable first-year expenses.
Increase Health Insurance Premiums for High-Risk Patients
TrumpCare stands to increase premiums for high-risk patients significantly. Most of the impact from this will occur at the patient level, but an overall rise in prices could also impact employers by increasing their shared costs at the top level. This could potentially impact equal opportunity employers and those who make special positions available to the disabled the most, but it remains to be seen exactly what TrumpCare will define as “high risk.”
Currently, the term “high risk” mostly points to patients with pre-existing health issues or significant questionable lifestyle habits that often lead to fatal or long-term illnesses. Depending on the provider, that may include smokers, people who have had cancer, patients with Down Syndrome, or even someone who suffers from certain mental health concerns.
It’s easy to take a knee-jerk reaction to this; after all, don’t people with serious health concerns need access to health insurance, too? Even the Republican party supports widespread health insurance access – the research proves that it leads to a healthier workforce. But blanketing everyone with the same brush isn’t always a good thing; it can cause significant increases in prices across the board. In this case, equal could end up meaning that someone who smokes two cigarettes a week with a martini is classified in the same way as someone smoking a pack a day; that’s just not fair.
By making small adjustments that reflect the needs of each patient, some individuals will experience higher premiums. But the vast majority that fall into a generally healthy category may see their premiums go down. That could potentially result in a lower generalized premium for average healthcare plans, both for individuals and for businesses, too. There is also some evidence that a change to this particular area of legislation may reduce the likelihood of preventative care options being covered.
Improve or Damage Certain Healthcare Stocks
If your business is involved in the healthcare industry, or if it invests in healthcare stocks as a method to produce capital, you should know that some analysts predict TrumpCare either harming or boosting stocks depending on how and when it is implemented. Under ObamaCare, some stocks flourished; this was directly related to the fact that better access to insurance encouraged more people than ever to seek medical care for everyday health concerns. It also created an environment where people felt empowered to seek preventative healthcare.
According to Bryan Rich at Forbes, health insurance provider Aetna rose from just under $30 USD per stock to an incredible $130 USD per stock. Investors in the company benefitted financially if they were wise enough to buy before it came into effect.
What remains to be seen is exactly how Trump will implement his new plan. The POTUS has repeatedly stated that he wants to preserve access to health insurance; that should mean that, at least for the most part, signups hold strong across the board. Thus, insurance premium providers shouldn’t see a sudden and drastic drop in income. There may be a slight adjustment in numbers if high-risk patients change companies, but most providers are already anticipating these changes and will work to adjust plans in an effort to compensate for them.
If Trump does hold to making healthcare premiums widely accessible, you could potentially see the industry become more competitive. This is especially true if he opens up the ability to buy or sell insurance across state lines (more on that in the next section). A more competitive industry will undoubtedly result in stock swings, but should also encourage market growth for the best health insurance companies out there. Savvy investors and brokers are already monitoring these potential shifts, so if you’re curious, be sure to ask your business broker for advice.
Purchase Healthcare Plans Across State Lines
One of the biggest and deepest impacts businesses could feel under an America with TrumpCare relates not to what they offer, but the fact that you may eventually be able to purchase your plans from across state lines. Right now, federal law makes it illegal for healthcare plans to be sold from another state; that’s significantly stifled prices and lowered competition for in-state insurance providers, but it hasn’t been beneficial for individuals or the businesses they work for. Without competition, prices rise steeply and it becomes cost-prohibitive to even take out insurance or offer it in the first place.
If TrumpCare does away with state limitations on healthcare insurance premium sales, your business could very suddenly and all at once have access to a much, much larger range of options to choose from. Instead of being stuck with a small, localized provider, you could easily go to one of the larger national providers instead simply because they offered you a better deal. Although this will lead to improved costs for individuals, businesses stand to feel it the most simply because they purchase group policies at a higher volume. Even if you’re able to reduce the shared costs per employee by just $10 per month, that amount adds up; $10 a month multiplied by 100 employees works out to about $1000 in lost income for your business.
Businesses with an international or national focus could also benefit from this approach. Currently, if a business has multiple offices across the country with locally-sourced employees, they have to take out insurance with multiple local companies to cover all employees within the state they reside. This would no longer exist under a nationwide approach; instead, you could go to a single company for group policies right across the board. That means fewer human resource expenses, less time talking to providers, and easier access to everyone’s policy from your HR portal or the web on the fly.
It’s difficult to anticipate exactly what TrumpCare will look like if and when it comes into effect; the current administration can’t exactly just toss out ObamaCare and start over. The most logical and likely scenario is not that Trump will get rid of ObamaCare altogether, but that he will amend it to provide businesses with more freedom and greater competition within the market. What remains to be seen is exactly how health insurance premium companies will react to the changes market-wise with the shift in legislature. The best way to ensure that your business is ready to adapt is to speak with your financial advisor as soon as possible; careful monitoring of both the changes and your current policies will ensure that you’re not caught with any sudden (and expensive) surprises.