Last updated on: 6/8/2015 9:13:09 AM PST
Is Obamacare Financially Burdensome for Businesses? - DEBATED
Dan Danner, MBA, President and CEO of the National Federation of Independent Business, Bruce Josten, Executive Vice President for Government Affairs at the US Chamber of Commerce, and Matthew Shay, JD, MBA, President and CEO of the National Retail Federation, stated in their Mar. 20, 2013 op-ed for USA Today titled "Affordable Care Act Hasn't Earned Its Name":
"Report after report has established that the only changes that have materialized under the ACA are, in fact, the opposite of what small-business owners have been demanding for decades. The law has increased costs and added profound complexity to an already confusing system; higher taxes and thousands of pages of new regulations are having a tremendous impact on the small-business community and have contributed to the slow recovery of Main Street...
Even the administration's own documents estimate that the Obamacare's new tax rules will add over 40 million hours of paperwork per year to individuals and job creators. And new regulations are still being written, which suggests that this estimate is low."
Tim Phillips, President of Americans for Prosperity, stated in his Mar. 1, 2014 op-ed for USA Today titled "Obamacare Squeezes Small Businesses: Column":
"The problem stems from Obamacare's mandate that insurance companies can't consider an individual's health when establishing plan prices. While well-intentioned, this has the unintended side effect of spiking premiums across the board, especially for the young and the healthy.
These higher costs will affect small businesses in any number of ways. After all, they have to find the money to pay the new expenses that Obamacare forces on them. The most obvious decision will be to cut back employee hours. Others might ask their employees to pay a greater percentage of their premiums (which means less take home pay). And some will stop providing health care altogether...
America's job creators have never been so burdened. Small businesses create two out of every three new jobs. They employ half of the country's workforce. These businesses are the key to America's economic well-being; they shouldn't be buried in rising costs and reams of red tape.
But thanks to Obamacare, they can either pay even more for their health plans, or they can drop them altogether. This doesn't exactly fulfill President's promise that Obamacare would save small businesses money."
David French, Senior Vice President for Government Relations at the National Retail Federation (NRF), was quoted in a Feb. 3, 2015 NRF press release titled "Retailers Support Effort to Repeal the Affordable Care Act," available at nrf.com:
"Dealing with the ACA's employer mandate and reporting requirements have already brought unwanted cost and complexity to retail employers, despite the serial delays. Moreover, the numerous unintended consequences of the law have slowed the creation of new retail jobs and limited the hours available to part-time employees."
The Small Business & Entrepreneurship Council (SBE Council) stated, in a Mar. 23, 2015 article written by SBE Council President & CEO Karen Kerrigan titled "Small Businesses and the Affordable Care Act at Five Years," available at the SBE Council website:
"Let's make this clear: The law has not produced lower costs...
Obamacare's administrative and compliance burdens are not insignificant either. They are imposing hefty costs on top of general frustration for small businesses... Moreover, the complexity of Obamacare's employer mandate (where, for example, a 30-hour work week is considered full time) and its sheer costs have forced small businesses to cut hours, wages and jobs...
From the small business perspective, Obamacare has exacerbated their 20-plus year struggle with health insurance – costs are too high and keep increasing, innovative choices are lacking, and buying coverage and administering health insurance is a burdensome hassle."
The American Action Forum, a "center-right policy institute," stated in its Sep. 9, 2014 report titled "Obamacare's Impact on Small Business Wages and Employment," written by Ben Gitis, Conor Ryan, and Sam Batkins, available at its website:
"The ACA imposes several burdensome regulations that could potentially harm job and wage growth, including the employer mandate and requirements on the generosity of coverage. Under the ACA, employers with 50 or more full-time employees are required to provide health insurance for their workers or pay a fine. In addition, the ACA enforces rules that govern the type of insurance plans they can provide and restricts their options in choosing low-cost coverage. When employers are required to provide health insurance and their low-cost options are limited, costs will naturally rise and companies will be more responsive to changes in insurance premiums. As a result, employees are less insulated from insurance premium growth, and if premiums rise considerably under the ACA, then employers could be more likely to offset those costs by cutting jobs or wages."
The National Small Business Asscoiation (NSBA) stated, in a foreword to its "2014 Small Business Health Care Survey," written by NSBA President and CEO Todd McCracken and NSBA Chair Jeffrey Van Winkle, available at nsba.biz:
"As the Affordable Care Act (ACA) continues to make headlines for problems with the online enrollment and ongoing delays to various aspects of the law, small businesses continue to struggle with the cost and complexity of providing health care benefits for their employees...
Today the average monthly per-employee cost of health insurance premiums for a small firm is $1,121. When asked in 2009 for the estimated monthly cost of their health benefits package, per employee, small firms reported $590 per month. Beyond health insurance premiums, employers report additional health-care related spending to the tune of $458 per month, per employee. Furthermore, a whopping 91 percent reported increases in their health plan at their most recent renewal, and the majority expect to continue seeing cost increases in the coming year...
When asked about the real-world costs of understanding ACA, small businesses report spending on average 13 hours and $1,274 per month—and that's just on the administrative side of understanding the law itself."
The International Franchise Association (IFA) wrote in its Sep. 2011 report "The Effects of the Patient Protection and Affordable Care Act on the Franchise Industry," available at the IFA's website:
"Our report shows that the new health care law will have negative effects on the franchising industry's ability to grow and create much-needed jobs for the U.S. economy. We estimate that the law will negatively affect tens of thousands of franchise businesses, adding more than $6.4 billion in increased costs, not including the cost of regulatory compliance. Further, we estimate that the jobs of more than 3.2 million full-time employees in franchise businesses would be put at risk.
These effects can best be described cumulatively as anti-small business growth. The health care law unintentionally discourages franchisees from owning and operating multiple locations. The law creates a competitive disadvantage for franchisees who do own more than one or two locations. The employer mandate in the law provides an incentive for franchisors and franchisees to replace fulltime workers with part-time and temporary workers. It imposes another layer of regulatory burden on business owners as they attempt to understand and comply with the new law. It increases the cost of doing business for tens of thousands of business owners who are struggling to recover from the deepest recession since the Great Depression. The law ultimately creates barriers to entrepreneurs who are looking to capitalize on the franchise business model to grow their business."
Bloomberg stated in its Feb. 18, 2015 report written by Michelle Cortez and Alex Wayne titled "Obamacare Is Barely Denting Corporate Profits," available at the Bloomberg website:
"The biggest entitlement legislation in a generation is causing barely a ripple in corporate America.
The Patient Protection and Affordable Care Act -- otherwise known as Obamacare -- is putting such a small dent in the profits of U.S. companies that many refer to its impact as 'not material' or 'not significant,' according to a Bloomberg review of conference-call transcripts and interviews with major U.S. employers.
That's even after a provision went into effect this year requiring companies with 50 or more full-time workers to provide coverage, and after more workers are choosing to enroll in existing company coverage because of another requirement that all Americans get insured...
The collective shrug from the nation's biggest employers undermines the arguments of Republicans, who call the law a job-killer as they seek its repeal.
While U.S. health-care costs continued to rise faster than inflation in the five years since the law was passed, their rate of growth has slowed. Employers spent an average of $11,204 per worker for health benefits in 2014, up 4.6 percent from a year earlier, according to Mercer LLC. That growth rate was 6.1 percent or more each year from 1998 to 2011."
Richard Lorenzen, CEO of Fifth Avenue Brands, a New York-based public relations firm, stated in his Apr. 22, 2013 article for Forbes, titled "Is the Affordable Care Act Really Bad for Business?":
"Scores of activists have protested and scorned the Affordable Care Act... Despite the overwhelmingly critical and hostile reaction, this reform to our healthcare system is not poised to wreak the havoc on American small businesses that the opposition is charging...
The Affordable Care Act does not require businesses with fewer than 50 full-time employees to provide their employees with healthcare coverage. To put this into perspective, 96 percent of the businesses in the U.S. have fewer than 50 employees, which illustrates the improbability of the detrimental effects that some claim the Act will have on business. (And if you have fewer than 25 employees and choose to provide insurance anyway, the Act provides a tax credit to offset the cost.)...
Businesses with more than 50 employees will be required under the Affordable Care Act to provide healthcare coverage to their employees. Let's put this into perspective. Only 0.2 percent of the businesses in the U.S. with more than 50 employees do not already provide healthcare insurance to full-time employees.
The Affordable Care Act has provisions to make providing health insurance very affordable for many of these businesses."
James Surowiecki, economics, business, and finance writer for the New Yorker, stated in his Oct. 14, 2013 column titled "The Business End of Obamacare," available at the New Yorker website:
"Obamacare will help small businesses with health-care costs, which have long been a source of anxiety... It provides tax credits to smaller businesses that want to insure their employees. And it requires 'community rating' for small businesses, just as it does for individuals, sharply restricting insurers' ability to charge a company more because it has employees with higher health costs. And small-business exchanges will in effect allow companies to pool their risks to get better rates."
Jason Furman, Assistant to the President for Economic Policy and Principal Deputy Director of the National Economic Council, wrote in his June 29, 2012 article "Upholding the Affordable Care Act Is a Win for Small Businesses," available at the White House website:
"The Supreme Court's decision this week to uphold the Affordable Care Act is a historic win for the nation's 6 million small businesses and their 54 million employees who will see fewer administrative headaches, pay lower premiums, and receive help to make the cost of covering employees more affordable. Those who claim that the law will place new burdens on small employers misunderstand and misrepresent how it will actually work – putting small businesses on a more competitive footing with larger firms."
Matthew Yglesias, Slate Business and Economics Correspondent, wrote in his July 2, 2012 article "Should Small Businesses Really Fear Obamacare?," available at the Slate website:
"The bill [PPACA] in fact contains substantial benefits (some might even say giveaways) for small businesses. That starts with a program already under way to offer special subsidies to firms with fewer than 25 employees that want to offer health benefits. As long as your employees earn less than $50,000 on average... you can get a tax credit to defray 35 percent of the cost of the insurance if you're a for-profit firm, and 25 percent if you're a nonprofit. When the law really gets rolling in 2014, those subsidies rise to 50 percent for for-profits and 35 percent for nonprofits...
Firms with fewer than 50 employees are also exempt from the 'employer responsibility' provision of the law that otherwise constitutes the biggest business burden in the legislation...
Put the special subsidies and the exemption together, and the result is a law that's pretty clearly a good deal for small businesses."
Gene Marks, columnist, author, and small business owner, stated the following in his Mar. 21, 2012 article titled "Why Healthcare Reform Is Great (And Terrible) For Small Business," available at the Huffington Post website:
"[I]f you have less than fifty employees (like I do) than you're exempt from the law. You don't have to do anything. You can have a health insurance plan. Or you don't have to have a health insurance plan. It's completely up to you...
And what if you have more than fifty employees? Well, you're required to have a health insurance plan. If you don't than you have to eventually pay a fine/fee/penalty... tax of $2,000 per employee. That sounds like a lot. But it's actually not as much as you think. When you dig down in the calculation, you'll see that the first 30 employees are exempt from the tax. And then when you compare the tax to what you're probably now paying for health insurance (which averages between $8,000-$11,000 per employee according to some studies), you may find that not carrying insurance and just paying the tax is way less expensive than carrying the insurance...
Because we're promised lower insurance rates and a state-run competitive exchange of products we may also find ourselves avoiding that annual anxiety attack when we're told how much our rates are going up that year. Theoretically, health insurance, previous subject to 15-20% annual increases, should now be more under control and easier to budget. At least that's what we're told. And that's another great thing for small businesses."
Joan McCater, Senior Political Writer for Daily Kos, stated the followng in her Dec. 9, 2012 article, "What Obamacare Means for Businesses: Facts v. Fiction," available at dailykos.com:
"[B]ecause of a lack of good public education about the Affordable Care Act from the administration and supportive members of Congress, other business owners, especially small business owners, are left with the idea that maybe this Obamacare is just going to be too expensive and too burdensome. That's a big problem, especially for employees of small businesses. Because for those businesses there are some pretty good deals.
The smallest employers are not only exempt from any potential fine for not providing insurance, if they do or want to provide insurance to employees, they can get tax credits to help do that. That's in effect now for companies with few than 25 employees and wages below $50,000 each. If they offer insurance and pay at least half the premiums, they can receive a tax credit of up to 35 percent of their contributions. After 2014, the tax credit goes up to 50 percent if the business buys coverage through the insurance exchange. Companies that have up to 50 employees and who do not provide health care benefits are not subject to any fines for not providing that coverage. Their employees will be able to get their coverage in the health exchanges the law creates starting in 2014.
Here's one of the greatest things for small business owners: they can afford health insurance for themselves!"