The fate of the 2010 Affordable Care Act is now in the hands of the Supreme Court which is expected to rule on the constitutionality of the legislation as soon as next Monday.
Although there has long been a consensus on the need to overhaul healthcare, the issue continues to be used as a political football. In the hyper-polarized atmosphere of an election year, some are arguing that anything less than a total repeal of the law will lead to disaster, while others maintain that the current legislation must be upheld in its entirety.
A third possibility — that the court will strike down only certain provisions of the Act — seems the most likely outcome. Here are the major provisions that could be upheld or discarded and what that could mean for small businesses.
Under the current law, employers with 50 or more full-time employees will be required to provide health insure or face having to pay a fine. The size of the fine is determined by applying a formula included in the law. Although the provision has criticized by some who allege that it would drive many smaller companies completely out of business, the vast majority of the nation’s approximately six million employers do not meet the 50-employee threshold, and are unaffected by it.
The individual mandate, which requires that everyone purchase health insurance by 2014 or pay a fine, has dominated much of the debate over the law.
While many claim that the provision violates the Commerce Clause of the U.S. Constitution, proponents argue that it is an essential lynchpin of the legislation designed to counterbalance another provision requiring insurers to offer coverage to individuals with preexisting conditions.
If the court were to strike down the individual mandate, and uphold the 50-plus employee provision, insurance costs for small businesses could indeed skyrocket.
Another provision requires states to create health insurance exchanges and affects businesses with up to 100 employees. Under the provision, the states are required to set up employer-only Small Business Health Options Programs that will allow small businesses to comparison shop for insurance plans in much the same way consumers shop for other services and, by doing so, reduce their insurance costs.
If the court strike down this provision, states would lose federal funds intended to assist them is setting up the exchanges.
In its current form, the 2010 Affordable Care Act offers tax credits to small businesses with 25 or fewer employees that pay average salaries of $50,000 or less.
Although the federal government estimates that between 1.4 million and 4 million small businesses qualify for the credit, only 170,300 of them took advantage of it last year. Many employers claim there is simply too little financial advantage to the credits to justify bureaucratic red tape involved in the process. Last year, the average credit was $2,700.
Jose Pagliery. CNNMoney. “Health reform: What’s at stake for small business” June 14, 2012 http://money.cnn.com/2012/06/15/smallbusiness/health-reform-law/index.htm?iid=SF_SB_Lead