The House Energy and Commerce Subcommittee on Health recently held a hearing to review how Obamacare regulations will affect employers’ ability to maintain health coverage.
To illustrate the magnitude of the new regulatory burdens on businesses, subcommittee chairman Joe Pitts (R–PA) displayed a stack of over 3,500 pages of Obamacare rules, notices, and regulatory guidance issued so far by the Administration. This additional burden, the hearing highlighted, will harm employers’ ability to offer health coverage and disrupt coverage for Americans across the country.
Among the new regulations are “minimum loss ratio” (MLR) requirements, which force health insurers to spend at least 80 percent of premium revenues on medical claims costs or “activities that improve health care quality.” The MLR requirements are likely to force some insurers out of the market, leaving businesses with fewer coverage options.
Additionally, the MLR regulations could place severe limits on the use of consumer-driven, high-deductible plans combined with health savings accounts (HSAs), an increasingly popular option in recent years. Since HSA plans have a high deductible and lower premium, their “loss ratios” tend to be much lower than the new rule allows. As Representative Michael Burgess (R–TX) pointed out during the hearing, HSAs put consumers in charge of more of their health care decisions, helping to keep costs down.
Other Obamacare regulations, such as new benefit mandates, will increase premiums, which will impose additional costs on insurance providers and employers. Added benefit and administrative costs could become too much for employers, forcing them to drop coverage for their workers.
While liberals have touted the new law’s small business tax credit as a way to help employers provide coverage and offset new costs, a poll of 304 small businesses performed by the Small Business and Entrepreneurship Council showed that only 7 percent of firms have used the available credit. Of those that did not, 27 percent said it was because they weren’t eligible, 21 percent said the credit was too small or offered no benefit, 3 percent said it was too complex, and 20 percent weren’t aware that it existed.
Karen Kerrigan, president of the Small Business and Entrepreneurship Council, said that the credit’s temporary nature makes it “no use to many entrepreneurs who need to know it will be available over the long term in order to have practical utility.”
Layering more bureaucracy on top of an overly complex system will not cut costs or improve health care quality. Instead, interfering regulations will only disrupt the insurance market by limiting choices for employers and patients and increasing costs. Repealing Obamacare and replacing it with real patient-centered, free-market reforms is the only way to create and maintain affordable health coverage.