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June 2012
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SOCKED Small business latest casualty as ACA impact plays out

The news just doesn't get any better for the Affordable Care Act. The program, better known as Obamacare, was pitched as a magnanimous effort by government to help the little guy. Instead, it keeps socking it to him.

A report this week from the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary said that 65 percent of small businesses will see their health insurance premiums increase under the ACA. Just how much is an open question, but fears are it could be significant.

That's bad news for a couple of reasons.

First, as noted in a story in the Feb. 25 Wall Street Journal, the Congressional Budget Office predicted in 2009, prior to passage of the ACA, that most small businesses would not see an impact on premiums if the ACA became law. The CBO predicted small businesses would see something between a 1 percent increase and a 2 percent decrease by 2016 under the ACA. The CMS now says cryptically "there is a rather large degree of uncertainty" about that prediction.

The second reason the report is bad news is that the analysis concerns businesses with fewer than 50 employees. Under the ACA, those businesses will not face fines if they choose to stop providing insurance and let employees take their chances in the Obamacare exchanges. The report said prior to this year small businesses with healthier employees were more likely to offer health insurance and pay below-average premiums.

The WSJ article notes that some small companies headed off the impact of the ACA in 2014 by renewing their policies early or maintaining policies under pre-Obamacare terms in the states where the president's belated "If you like your insurance you can keep it" waivers were allowed by regulators. So the full impact on small business coverage and people who have it won't be felt until 2015.

There's no question that the ACA has created winners and losers. The problem is there appear to be more losers than winners with each new revelation. The program as originally envisioned was supposed to extend health insurance to 25 million Americans who were uninsured.

But in practice it has caused millions of Americans who were previously insured to have their policies canceled, and it looks from this week's CMS report like there is more of that to come. Worse, early analyses show that most of the people who have to date bought insurance through the Obamacare exchanges already had insurance. So the overriding premise - the idea that the law would bring affordable health insurance to millions of Americans who did not have it because they could not afford it - simply isn't playing out, and a lot of innocent bystanders have been hurt in the process.

The underlying goal of the ACA was not a bad one. But the law itself is proving a disaster. The best thing for the nation would be to repeal it and start over. Unfortunately history shows that in Washington, mistakes such as this often become immortal.

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