President Barack Obama’s pledge that doctors and health plans would not change under the Affordable Care Act has proven illusory, and nobody knows that better than America’s entrepreneurs. Due to a glitch in the law, they’re left with much more expensive, second-rate health insurance.
According to the U.S. Small Business Administration, more than 78 percent of America’s 28 million businesses are “non-employer” firms, people who create their job and have nobody else on payroll. That’s a workforce of almost 22 million – larger than California and Michigan combined – and many are America’s entrepreneurs and job creators.
These budding business leaders often buy their own health insurance on the individual market. Prior to the Affordable Care Act (ACA), they selected from a wide range of coverage options. But many affordable options vanished under the new law, forcing these business owners onto the exchanges. There, coverage changed and prices spiked significantly.
Average premium increases on what was once the individual market grew 99 percent for men and 62 percent for women, according to an early analysis done by the Manhattan Institute. And the local details are extraordinary: 40-year old males in North Carolina are looking at average rate hikes of 305 percent on the ACA exchanges.
One reason for these increases: the law eliminated true catastrophic plans from the individual market for most people over the age of 30. Catastrophic insurance requires the insured to pay most medical bills out of pocket via a very high annual deductible, but protects against potentially bankrupting major injuries, illnesses and hospitalizations.
Because these policies only pay costly and rare expenses, the premiums are low and affordable. For many, the coverage was a good fit for many years.
Consider the real example of “David,” a 40-something consultant in North Carolina. His pre-ACA family insurance was a catastrophic coverage policy with a high deductible. For a price he could afford, it covered a pre-existing condition and specialists he needs at Duke University.
Late in 2013, his high-deductible, catastrophic option on the individual market was suddenly gone, cancelled in advance of the ACA prohibition that started in January. He couldn’t afford to convert to an ACA-conforming lower-deductible policy at a minimum increased cost of 300 percent. Instead, he was forced to go without insurance for the rest of 2013 until the ACA exchanges came on line.
Ironically, David is at an income level where he qualifies for an insurance premium subsidy on the ACA exchange. But David – and
millions of other entrepreneurs – liked his more affordable health coverage, and his doctor, and he couldn’t keep either.
Healthcare reform is already in need of serious reform. David should be able to choose his health care and control his individual care dollars. He can’t under the Affordable Care Act, because the law leaves entrepreneurs behind. After enduring months without coverage, they’re paying far more for far less.
Bradbury H. Anderson served as chief executive officer of Best Buy, and is a member of the Job Creators Network.