A new report may come as bad news for small business owners who have been contemplating how the Patient Protection and Affordable Care Act would affect their employee benefit programs.
According to the independent nonpartisan policy institute American Action Forum, the cost of health insurance for Americans is anticipated to increase between now and 2019. This is largely as a result of healthcare inflation, weak income growth and more businesses opting to no longer offer employer-sponsored coverage for workers.
Part of the reason for this, according to the AAF, has to do with the subsidies for insurance purchased through state exchanges. This new entitlement that certain Americans may be eligible for based upon their economic conditions is a "major cause for concern," the group notes, mainly because the federal debt is larger than the national gross domestic product. As such, costs may swell significantly.
Already, since the PPACA was passed in 2010, the Congressional Budget Office has increased its cost estimate to $515 billion from it's previous $462 billion between 2012 and 2019.
"Unfortunately, in the short life of the PPACA, the projected costs have been revised upward by nearly 25 percent already," writes the report's lead researcher, Douglas Holtz-Eakin. "Given the risks of faster than expected health care inflation, slow growth in incomes, and the potential for less employer-sponsored insurance in the future, there is good reason to anticipate that the cost could rise further yet."
As business owners await the HR compliance rules that derive from the PPACA, self-insurance may be the most cost-effective healthcare option for employers who want to abide by the rules and regulations of the healthcare law and still offer employee benefits to their workers.
As noted by the Self-Insurance Institute of America, a self-insured group health plan enables employers to assume some of the costs associated with health coverage, which are paid on an as-needed basis rather than a fixed premium. This enables business owners to better customize their employees' healthcare needs.
