Health Care Reform

Health care reform is a signature issue for the Obama administration, which has called for an overhaul of the existing health insurance and delivery systems to ensure that all Americans have access to affordable health care. Congress completed action on two reform bills that were designed to achieve these goals. Nonprofit organizations engaged in the policy debate because reforms presented the opportunity to reduce the costs that nonprofits pay as employers and to extend health care coverage to the individuals served by the nonprofit community.

Status

President Obama signed into law and the U.S. Supreme Court upheld the majority of the Patient Protection and Affordable Care Act, ("ACA") including one of its most important components, the individual mandate. The court, however, struck down the law's requirement that states expand their Medicaid coverage. By 2014, Health and Human Services (HHS) must write the regulations for employers in providing insurance, and states that choose to do so must set up their own health insurance exchanges. The federal government will assume the responsibility for states that refuse to set up their own exchanges.

Why it Matters

The Affordable Care Act, among other reforms, extends access to coverage for the uninsured and prevents the denial of insurance for pre-existing conditions. It contains several provisions that would help nonprofit employers control health care costs.  Some of the key provisions that affect small employers include: 

• Small Employer Health Credit: Provides a tax credit that will allow small nonprofit employers (25 employees or fewer, average wages less than $50,000 per year) to deduct 25% of qualified health costs from 2010-2013 and 35% of qualified costs for 2014 and onward for up to two-years from their withholdings tax liability.
• Health Insurance Exchanges: Provides a mechanism for individuals and employers to buy lower-cost health insurance as a part of purchasing pool. All employers with fewer than 100 employees and individuals with incomes between 133% and 400% ($24,352 – $73,240) of federal poverty level will be eligible to participate in the exchanges once they are operational. States are permitted to allow employers with more than 100 employees access to the exchanges after 2017. The law anticipates that the exchanges will be operational by January 1, 2014.

What Nonprofits Can Do

Take advantage of the small employer health credit.

Additional Resources

•  National Federation Of Independent Business Et Al. V. Sebelius
• “Nonprofits: We Must Start Beating the Drum”
• "Nonprofits Upset by Exclusion From Health-Care Proposals" by Stephanie Strom 
• Listening Post Communiqué No. 15 "Health Care and Nonprofits: The Hidden Dimension of America's Health Care Crisis"
• Health Care Reform and Small Business, CRS Report R40775, April 10, 2008.