Trumpcare and California Single-Payer Measures – The Impact For Small Businesses

May 27, 2017by Alex Strautman

Trumpcare and California Single-Payer Measures Gain Approval. What Does That Mean For Your Small Business?


What Is Trumpcare’s Potential Impact On Small Business?

Trumpcare, formally known as The American Health Care Act (AHCA) – the GOP-backed alternative to the Affordable Care Act (ACA) – narrowly passed the U.S. House of Representatives in a 217 to 213 vote on Thursday, May 4, 2017. As drafted, the AHCA would make some significant changes to President Obama’s health care measure that was signed into law in 2010. It would do away with the individual mandate that most Americans have health insurance or pay a penalty. It would also eliminate the employer mandate for businesses with 50 or more full-time employees to furnish them with health coverage or pay a penalty. It would allow states to seek a waiver on the ACA’s 10 essential health benefits (and, instead, give them the option to create their own list of required benefits).

For employer-sponsored health plans, the AHCA would allow health insurance companies to, again, impose lifetime and annual caps on benefits. It would further delay the planned 40 percent excise tax on high-end health plans to 2026 (after already being pushed back to 2020). And it would require a 30 percent increase in premiums to regain insurance for consumers who lose coverage for more than 63 days in a year, adversely affecting those with a pre-existing health condition. The bill has moved across the Capitol to the U.S. Senate, which has already made clear that it cannot be voted on without some changes. With just a two-vote Republican majority in the Senate and strong Democratic opposition to eliminating (or overhauling) the ACA, it would take just three GOP “no” votes for the AHCA to go down.

What Is SB 562’s Potential Impact On Small Business?

Meanwhile, lawmakers in Sacramento moved forward last month with legislation that would dramatically overhaul the health care system in the Golden State. California Senate Bill (S.B.) 562 would replace the current system of multiple health insurance companies vying for the business of California businesses and residents with a single-payer, government-run health care system. S.B. 562 passed out of the state Senate Health Committee on April 26 on a 5-2 vote after three-hour hearing. It was discussed by the Senate Appropriations Committee on May 22 – where it faced tough questions about funding for the sweeping overhaul of health care in California. An analysis of the legislation released at the committee hearing says creating a single payer health system in the state will cost an estimated $400 billion a year, including $200 billion in new tax revenue. Half of the $400 billion would come from existing local, state, and federal spending on health care.

The additional $200 billion would have to be raised through a new 15 percent payroll tax on employers and employees.  According to one of the bill’s co-sponsors, State Sen. Ricardo Lara (D-Bell Gardens), the state analyst’s fiscal estimate is a “starting place” and details on financing the bill are expected in September. At $400 billion, the projected cost would be more than double the current annual state budget of $180 billion. That could make it a tough sell for residents. Already a wide variety of groups oppose the measure, including health insurance companies, employers, manufacturers, and business groups. The California Chamber of Commerce says S.B. 562 is a significant job killer. To learn more about national and state legislative efforts to change how businesses and employees get their health insurance, talk with your employee benefits broker. If you don’t already have a broker, we’ll help you find a CaliforniaChoice broker to speak with about health insurance options for your group.

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This guide compiles a list of common questions you may have before you start offering health insurance coverage.