Small Business Owners to Congress: Health Law Means More Headaches, Higher Costs

Jul 13, 2015 - 10:30am

Executive Director, Strategic Communications


Health care worker
Obamacare isn't working for small businesses. Congress can help. Photographer: Andrew Harrer/Bloomberg

Now five years after the passage of the law, Obamacare continues to plague small businesses and entrepreneurs in every corner of the country.

Three small business owners testified during a Senate hearing last week about the numerous flaws of the 2010 health care overhaul; namely, that it has made purchasing health insurance for small companies less predictable, more complicated and considerably more expensive. This, from the Washington Examiner:

Thomas Harte, owner of Landmark Benefits in New Hampshire, told the Senate Health subcommittee on Primary Health and Retirement Security that the Affordable Care Act makes healthcare more expensive for small business owners… Additionally, "available carrier choices are becoming more and more limited" as the medical care costs differ between states, and "health reform implementation" also varies between areas.

Harte is hardly alone. James Scott, owner of Applied Policy, a small business in Alexandria, Virginia, told lawmakers on the panel that his company’s annual premium increases have been considerably more difficult to predict since the health law was passed:

Scott said that, as a small business owner, he has experienced this sudden change in costs of healthcare. In July of 2014, he went to renew his insurance plan with his insurance broker. She told him that his… insurance premiums increased by 40 percent… His broker had to have seven different meetings with each of his employees in order to discuss their individual upcoming coverage options.

Higher premiums, less certainty, and more headaches. Clearly, Obamacare still isn’t working for small businesses. As Congress continues to explore possible changes to the statute, here are three things lawmakers should do to at least soften the health law’s blow to Main Street firms:

Repeal of the looming small group market expansion, which, as it stands, would drive up premiums for nearly two thirds of insurance group members with between 50 and 100 employees, according to an analysis supported by the BlueCross BlueShield Foundation, a charity arm of insurance giant Anthem That expansion is slated to happen next year.

Repeal the employer mandate.  The cost and burden of complying with the mandate and its associated reporting requirements eclipses the very minimal coverage expansion, if any that can be attributed to the mandate in the first place.

Repeal the Health Insurance Tax (HIT) and the 40 percent excise tax.  The HIT went into effect in 2014 and levies an additional health care tax on plans sold on the fully-insured market. Small businesses represent 88 percent of the companies purchasing through that fully-insured market. Meanwhile, the 40 percent excise tax will eventually hit the majority of plans offered by employers and ironically force them to choose between paying the 40 percent excise tax or paying the employer mandate penalty. Coverage that is required under the employer mandate provision will in very short order exceed the thresholds in place for the 40 percent excise tax.

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About the Author

J.D. Harrison
Executive Director, Strategic Communications

J.D. Harrison is the Executive Director for Strategic Communications at the U.S. Chamber of Commerce.