By Susan Bloom
With the Trump Administration’s failure to repeal and replace the Affordable Care Act with their proposed new healthcare bill on March 24, “Obamacare” continues to remain in effect, as do the many fiscal mechanisms put in place to help fund the plan’s expanded healthcare coverage, including hikes to the Medicare Payroll Tax – levies which many distributors feel have put undue financial burdens on their business.
Among the disenchanted is Steve Blazer, President of Blazer Electric Supply in Colorado Springs, Colorado, who contends that the federal and state evolution of Obamacare have put increasing pressure on his firm’s P&L. “We’ve seen three years of increases to premiums that amount to over $125,000 annually for our insured, which is less than 80 employees, and after a 20%+ increase in 2016, we’re facing a 9% increase on our next renewal,” Blazer says. “In a nutshell, our experience with Obamacare has been very negative, though part of this can be attributed to the state of Colorado, which, for some reason, changed the requirement for large business classification (and lower rates) from 50 employees to 100.” With 95 employees, he said, Blazer Electric must now comply with a ‘small business’ rate structure, one that’s less cost-effective than before.
An Ongoing Struggle
“Through the Affordable Care Act, the federal government gave states the right to expand Medicaid to as much as 138% of the federal poverty level, bringing more people under Medicaid coverage, and also established a mechanism to buy health insurance online through state exchanges, but at the same time a lot of things about the ACA haven’t been working,” stresses Ed Orlet, NAED’s Vice President of Government Affairs. “Many health insurance companies were losing money and dropped out of different state exchanges such that the number of counties where there’s only one choice of insurer on the exchange has risen dramatically, resulting in often higher-deductible or higher-premium plans. Health insurance costs have been running rampant for years and distributors have tried to be creative in providing healthcare coverage for their employees but haven’t been happy with the tax increases and stricter regulations.”
Among other things, said Orlet, the proposed Republican healthcare bill would have repealed tax surcharges/penalties that Obamacare put into place for non-compliance, phased out the prior plan’s expansion to Medicaid over time, and eliminated the Employer Mandate. “But Republicans lost the messaging battle and then didn’t do what their base wanted them to — their bill wasn’t a repeal but a reform of Obamacare — which lost the support of many conservatives,” Orlet said. “It’s hard to predict things these days, but as a function of the ‘adverse selection’ problem (more sick and elderly Americans are signing up for healthcare coverage versus younger, healthier ones), Obamacare may indeed implode, with insurers continuing to lose money and pull out,” he said.
For distributors like Blazer, the future of Obamacare remains unclear. “I think it will take both parties working together to identify the most important issues and find solutions that make sense for the majority,” Blazer says. “Even most Democrats admit there are flaws, so hopefully all of the egos can be put aside for the sake of a plan that results in lower rates. What I was hoping for was a program that would get insurance companies re-engaged and promote the exchange of rates and plans across state lines.”
Orlet fully supports Blazer’s wish list. “Rising taxes are going to continue to cost distributors and they’ll also see continued premium increases. The true missed opportunity so far has been the failure to inject some real competition into healthcare markets and save money via tax reform, which is the real industry pain point here,” Orlet says.
Bob Settle, Vice President of Marketing at Crescent Electric Supply in East Dubuque, Illinois, agreed. Repeal and replacement aside, “the shadow that this failure casts on the president’s (and Congress’) ability to pass infrastructure spending and tax reform legislation is much more concerning,” Settle says. “Should either of those initiatives fail to pass, there’s a real danger that the economic enthusiasm that’s been building since the election will taper off.”
“NAED members are entrepreneurial, creative, free-market folks who just want a level playing field to compete on,” Orlet says. “They support more competition and choice in healthcare markets and less government restrictions regarding what healthcare plans look like and how they’re priced so that they can focus on more important matters like growing their business.”
As for Obamacare, “the healthcare issue will need to be addressed at a future date, hopefully with more public discussion and bi-partisan participation by the House and Senate,” Settle confirms. “Healthcare reform is clearly needed and cost containment is in everyone’s best interest.”
Taking Action
All experts agree that industry involvement is critical to helping distributor and manufacturer interests get heard by the nation’s legislators. To that end, NAED is once again sponsoring an annual ‘Congressional Fly-In‘ event in Washington, D.C. on June 20-21, during which time NAED representatives will brief participants on talking points and set up appointments for them with representatives in their district for meetings about the issues impacting their business the most, including health care, estate tax repeal, LIFO, labor regulations, and the Commercial Building Tax Deduction. Early bird rates are good through May 17.
“It’s an interesting and exciting time in Washington and there’s no better time for NAED members to press their case before their elected officials,” Orlet encourages. “Even though things may be off to a slow start, developments will take place this year and we need to be on the front line to make sure that the things that happen are things we support.”
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Bloom is a 25-year veteran of the lighting and electrical products industry. Reach her at susan.bloom.chester@gmail.com.
Tagged with healthcare, tED, Trump