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The Impact of the Affordable Care Act on Individuals and Businesses

The Affordable Care Act is still, in many ways, the great unknown. Some conservative commentators equate the act with sorcery and evil, some liberal commentators equate the act with puppy dogs and sunshine. The truth is, no one knows for certain yet. However, one of the better guesses about what the ACA will mean comes from the Society of Actuaries.

The research and analysis from the Society of Actuaries is important because they are noted for not having a political agenda, and because they earn their income by taking data as it is made available, and both qualifying and quantifying what that means for citizens in real dollars. One estimate is that insurance companies will be paying 32% more in claims once all aspects of the ACA have taken effect. However, that increase will be only for those who seek to buy insurance on the open market, not those already on employer insurance or Medicare. Although the increase in claims will likely drive the cost of premiums up, once again, that will likely only be for that 10% (or less) of the populace who buys insurance on the open market.

The reason those people who buy their insurance on the open market will see an increase is many of them have been excluded from purchasing insurance due to a pre-existing condition. By definition, if insurance companies don’t want people to be insured with them due to a pre-existing condition, their care will cost more once they gain coverage. It is believed that most young, healthy people who are not currently covered by insurance will pay a penalty and not get coverage as the penalty is expected cost less than insurance would.

A survey of employers of businesses from 50 to 499 employees showed that those employers predicted that health insurance would increase up to 6.5% for each individual. The majority of these companies expected to pass at least some of those costs on to their employees.

The overall impact of the Affordable Care Act may not be known for months. All businesses should feel an obligation to pay close attention to the intricacies of the act and make whatever adjustments are necessary to protect themselves and their employees.

B2B CFO®

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