"Job Unlocking" and Other Under-Reported Aspects of the Affordable Care Act

Everyone's talking about the short-term effects of the ACA -- but what about the long-term one? There's a lot of evidence that some good things will eventually come out of reform.

Jan 15, 2014 at 2:13PM

The media is all over the Affordable Care Act, mostly because of intense political drama. Reports on the number of applicants signed up, the strengths and weaknesses of various state exchanges, and the "he said, she said" of website administration are getting a lot of attention, from the Internet to cable news.

However, fewer analysts are looking at the long-term effects of the ACA. We can reasonably assume that, over time, more people will buy insurance over state exchanges as people change jobs, retire, become unemployed, or generally move around in the system. With that in mind, we can count on certain kinds of outcomes that will change the work world and the American economy.

Undoing "job lock"
One of the most exciting aspects of an alternative to employer-provided benefits is that it removes one of the most daunting barriers to small-business creation in America. Throughout the past 30 or 40 years, entrepreneurialism has lagged because people couldn't afford to leave their day jobs. This is largely because of the high cost and unavailability of private health insurance, which could be obtained at much lower prices through an employer in a pooled group plan. In comparison to group plans, individual plans became unaffordable, especially for anyone who had a health condition.

With a viable alternative in place, individuals are freer to leave their employers and start up their own businesses, because they can rely on more reasonably priced medical insurance for themselves and their families.

Small-business protections
Another under-reported outcome from the ACA is that businesses will get some of the same types of protections that individuals do. For example, they will now receive protection from some of the traditional price hikes that happen when one or more employees get sick and start to require medical attention.

This resource from the U.S. Small Business Administration details how the Small Business Health Options Program, or SHOP, will allow small businesses to benefit from better purchasing power through risk-pooling and lower administrative costs.

To be clear, small businesses with fewer than 50 employees will be free from the federal insurance mandate that affects larger companies. Instead, the federal system will now offer tax credits and other incentives for small businesses to keep employee coverage.

Insurance that goes with you from job to job
Another major thing the ACA is doing -- again, over the long term -- is to change the way we think about health insurance. Some suggest that the traditional tying of health insurance to employers was a historical mistake.

By establishing an alternative option, health care reform is likely to lead more people to buy private insurance that they'll carry with them throughout multiple job changes. Assuming the state exchange products are competitively priced -- and many reports indicate that they are -- employees won't have such a huge incentive to jump into employer-offered benefits, which may still carry higher premiums and other costs.

The result of this will be a huge release of administrative pressure. Those with "boots on the ground" in the human-resources or hiring industries understand how difficult it can be for employers to manage the provision of benefits to all of their employees and their families on a regular basis. As a practical matter, the ability to take people on board without wrangling over benefits will dramatically change the standard types of employment contracts in many industries.

With so much media attention focused on the current situation, there has not yet been a lot of long-term thinking about how future generations of workers may be supported by reform. That's not to say there are no major concerns about the new model, and certainly the ACA is no panacea. But if the law works the way it was intended to, it will start to build future benefits that don't involve immediate gifts or discounts to buyers, but rather a gradual implementation of new kinds of economic freedom.

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Justin Stoltzfus is a contributor to WiserAdvisor.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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