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What if the Affordable Care Act Fails?

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The world waits on pins and needles as the Supreme Court is scheduled to rule on Obamacare—but what happens if it doesn’t pass? This is a huge question for small businesses and employees alike, as over 160 million people get insurance directly through employers, according to CNN Money. Passed in March 2010, the bulk of the Affordable Care Act is scheduled to take effect in 2014. While some employers have already taken advantage of the act’s tax cuts, many are still essentially unaffected. However, even if the bill fails to pass the courts, employers will have to take a long, hard look at health care. Here’s a glimpse at what small businesses can expect if Obamacare is deemed unconstitutional.

What if the Affordable Care Act Fails?

A Premium Spike
Right now, insurance companies are waiting in limbo as the whole state of their industry is threatened. The act would create health care exchanges, which allow small businesses to compare private insurers and government-sponsored insurance plans. This sort of competition ideally leads to lower premium prices, and if the option for health care exchanges is shot down, insurance companies have free reign to hike up their prices. To allay the rising (and potentially skyrocketing) cost of health insurance, some state legislatures, such as Illinois, New York and Rhode Island, have got the ball rolling on their own health care exchanges.

No More Adult Dependents
Once the bill was passed, adult dependents under 26 years old were able to stay on their parents’ health insurance plans. As would be expected, this raises the cost for employers who provide insurance plans, making employee related expenses much higher. If the Affordable Care Act is shot down, small business owners can once again opt out of this expensive proviso. (Although states like California already have this rule on the books.) However, young, healthy people will be less likely to seek out and pay for health insurance plans. With fewer young people paying for health insurance, premiums may be even more likely to rise.

Higher Taxes
This may sound counterintuitive at first, as the Affordable Care Act will come with a big bill. However, axing the bill would mean letting go of the individual mandate (which happens to be one of the law’s most controversial features). The individual mandate requires all uninsured people to purchase health insurance or face a fine.
As more and more people live without health insurance, taxpayers may be forced to bear greater burdens. The state of California, for example, is home to about 4 million uninsured individuals. If the act fails to pass, the state will lose an anticipated budget of $15 billion for health care costs, according to the Los Angeles Times. To soften the blow for taxpayers, hospitals and doctors have typically charged higher fees for insured patients—making insurance companies pay more. This means each uninsured person translates to higher taxes, higher premiums or possibly both.

The Supreme Court will unveil its ruling any day now, as small businesses across the nation hold their breath. The fate of the Affordable Care Act could change the very nature of employer insurance plans. From finances to employee structure, this ruling will affect small businesses at the very core.

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