3 Benefits of the Affordable Care Act Every Business Leader Needs to Know About Obamacare is helping smaller businesses to offer competitive benefit packages that were unaffordable previously.
By Tor Constantino Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
This past year marked the first full year of implementation of the Affordable Care Act (ACA), which expanded Medicaid coverage and enabled the set-up of insurance exchange "marketplaces" for individuals to select healthcare plans.
It also established the framework to measure performance, outcomes and effectiveness of healthcare providers.
Whether you agree or disagree with the politics that drove the ACA, it's the law---and there are some aspects of the ACA that business leaders need to know regarding this healthcare reform legislation as it continues to be rolled out nationwide.
Michael Kleinrock is the director of research for the IMS Institute and co-author of a recent report titled Medicine Use and Spending Shifts, which looked at a range of healthcare issues including the first independent, evidence-based analysis of how ACA is being implemented. Based on this research, Kleinrock shares three specific aspects of the ACA that are important for any business leader to understand.
1. Recruiting top talent.
According to Kleinrock, one of the most compelling aspects of the ACA for small and start-up businesses is that they're now able to compete more effectively for talent and higher-caliber employees because they can now offer discounted healthcare benefits.
"If you're small enough, you're not required to offer benefits, but for growing organizations the law requires healthcare offerings. The insurance exchanges at the state level provide a cost-effective healthcare option for most businesses, which is an important consideration for potential employees who are considering joining a company," said Kleinrock. "The exchanges also benefit workers directly by giving them a variety of options and flexibility to choose the kind and types of coverage they want, which were previously unavailable from smaller-sized employers."
The battle for talent is difficult for small businesses, but the advent of publicly-run insurance exchanges as a low-cost healthcare option can help drive recruitment efforts.
Related: Warning: Affordable Care Act Penalties Start This Year
2. Streamlined healthcare offerings.
Businesses with more than 100 employees are required to provide health insurance for those individual workers, representing an unsecured risk for business owners and leaders who run companies that size. Kleinrock says that one of the ways to mitigate that risk is for employers to shift from a "defined-benefit" mindset to a "defined-contribution" approach, which is allowed under ACA guidelines.
"The thinking is that rather than having employers offer an expensive suite of healthcare plans and options to employees, another option would be to commit a fixed dollar amount to the workers for their healthcare coverage and let the employees choose the type of coverage that's right for them," said Kleinrock
Business owners and entrepreneurs are constantly trying to get the talent and resources necessary to run their businesses better. The ability to offer a streamlined healthcare offering may help achieve both options.
But Kleinrock says there are challenges to the model, "One thing to keep in mind is that these options push a lot of responsibility and cost onto the employee, forcing them to make choices regarding healthcare services based on their personal ability to pay. So they may not make the best decisions to seek the care they need based solely on cost, but that's a trade-off available under ACA."
Related: 4 Alternatives to Offering Paid Healthcare Benefits
3. Improved productivity.
Employees will increasingly have to decide for themselves regarding those value trade-offs of the coverage available to them. However, one inescapable aspect of enhanced access to healthcare services and options is that employees who take advantage of those offerings tend to be healthier, more productive, more reliable and have fewer sick days.
The inverse also holds true. Employees who are out of work because of sickness cost their employers more due to productivity losses, system inefficiencies, delays on deliverables and potential customer service issues.
"Some of the unforeseen costs of having sicker absentee employees are their replacement costs," said Kleinrock. "The expense of finding a new worker, training them, allowing for their learning curve, et cetera. Beyond those hard expenses is the fact that the hiring process takes time, which is an intangible cost to your business but a real one nonetheless that's frequently left out of the healthcare discussion."
While the ACA is not a perfect system, there are some aspects of its implementation that might benefit business leaders who can see beyond its politics
[Disclosure: Tor Constantino is not employed by the IMS Institute for Healthcare Informatics, but he does work for its parent organization.]
Related: 4 Hacks for Lowering Health-Care Costs While Improving Employee Health
