This week the House will vote on a bill to repeal the Affordable Care Act (ACA) of 2010. Repeal of the Affordable Care Act would deny 32 million uninsured Americans access to health insurance. Repeal would mean children with pre-existing conditions could once again be denied coverage, young adults would be thrown off their parents’ policies, and the chronically ill who have already enrolled in pre-existing condition insurance plans would have their coverage cancelled. This would be a major setback for the tens of millions of people affected and would harm economic growth as a result.
Repealing the Affordable Care Act would be bad for business and bad for the economy. We are at a crucial stage of the economic recovery. While the private sector has expanded payrolls for 12 straight months, the unemployment rate remains at an unacceptable level. Given where we are, we must do things that help bolster the recovery, and repealing the Affordable Care Act would be a step in the wrong direction.
The ACA helps businesses and the overall economy by eliminating hidden costs that currently contribute to higher health care premiums charged to businesses and the government. For example, health care costs for the uninsured are currently passed on through higher premiums to those to those who pay for health insurance – an estimated cost of an additional $1,000 per worker with family coverage each year. Expanding health insurance coverage to nearly 95 percent of Americans will help to bring down premiums by removing this added cost.
In the absence of reform, health care costs are projected to rise at an unsustainable rate, which will make it increasingly difficult for both businesses and the government to provide health insurance. The ACA includes many provisions that will slow this unsustainable cost growth, including adding to investment in preventive care, linking provider incentives to outcomes, and providing additional tools to control Medicare costs through the Independent Payment Advisory Board. In addition to benefitting businesses that are facing rising costs of providing health insurance, slowing the growth of health care costs significantly improves fiscal sustainability by saving the federal government more than $100 billion in the first ten years and considerably more in the second ten years. We need to take serious steps, including fully implementing the ACA, to bring down future government spending. Failure to address our long-term fiscal problems will lead to higher interest rates, lower business investment and slower overall economic growth.
The Affordable Care Act makes small businesses more competitive by making health insurance more accessible and more affordable. Many have struggled to compete with larger businesses and attract the best workers because of difficulties in providing health insurance. The Affordable Care Act changes that. It helps offset health care costs for small businesses through a tax credit that is worth up to 35 percent of health insurance premiums and is available immediately. And this credit will rise to 50 percent starting in 2014. The health insurance exchanges created under the law will begin in 2014 and allow small businesses to pool their buying power and benefit from reduced administrative costs. Small businesses will also benefit from additional protections under the ACA. For example, the ACA prohibits insurers from inflating premiums when a small business employs a sick worker.
The ACA also ensures that workers will have continuous access to affordable health care, regardless of their employment status or where they work. This increases the flexibility and dynamism of the labor market, as workers will be able to transition between jobs without worrying about losing their insurance. A dynamic labor market contributes to U.S. productivity and competitiveness through increased entrepreneurship and better matches between employees and employers.
Finally, the benefits of the ACA go beyond these immediate effects on the economy and businesses. By reducing wasteful spending and promoting high quality care, the ACA redirects our limited resources away from unnecessary health spending towards more important priorities that will make Americans healthier, will create jobs, and will help generate economic growth.
The Affordable Care Act provides Americans certainty that they will have continuous access to affordable health insurance. And it provides businesses and the government certainty that health care costs will be contained in the future. Additional certainty encourages businesses and families to invest, laying the foundation for stronger economic growth. This is exactly what we need at this crucial stage of the economic recovery.
Tim Geithner is the Secretary of the Treasury.