Sean Hackbarth Sean Hackbarth Senior Editor, Digital Content

Published

February 11, 2017

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Small business owners are speaking out as the debate over major health care law changes heats up in Washington.

At a CNN-sponsored health care debate, LaRonda Hunter, a Texas small businesswoman who owns four hair salons and employs 45-48 people, asked Senator Bernie Sanders (I-Vt.) how her business could grow when it couldn't afford to provide her employees with health coverage:

I'm not a wealthy person, so it's impossible for me to grow my business. My question to you, Senator Sanders, is how do I grow my business? How do I employ more Americans without either raising the prices to my customers or lowering wages to my employees?

Sen. Sanders bluntly replied, “Let me give you an answer you will not be happy with.”

I think that for businesses that employ 50 people or more, given the nature of our dysfunctional health care system right now, where most people do get their health insurance through the places that they work–I'm sorry, I think that in America today, everybody should have healthcare and if you have more than 50 people, you know what, I think–I'm afraid to tell you, but I think you will have to provide healthcare.

While ignoring the fact that Ms. Hunter had fewer than 50 employees--meaning she doesn't fall under the Affordable Care Act's employer mandate--Sen. Sanders seems to think small business owners like her have a secret pile of money they can go to when expenses go up. That’s simply not the case.

While watching the exchange, I recalled reading about Ms. Hunter’s predicament in The New York Times in 2015:

Starting in January, the Affordable Care Act requires businesses with 50 or more full-time-equivalent employees to offer workers health insurance or face penalties that can exceed $2,000 per employee. Ms. Hunter, who has 45 employees, is determined not to cross that threshold. Paying for health insurance would wipe out her company’s profit and the five-figure salary she pays herself from it, she said.

“The margins are not big enough within our industry to support it,” she said. “It’s not that I don’t want to — I love my employees, and I want to do everything I can for them — but the numbers just don’t work.”

Growing her business and hiring more workers still isn’t in the cards for Ms. Hunter two years later, and unfortunately Sen. Sanders had no answer for her.

Congressman this week also heard from a business owner who explained that Obamacare’s failure to curb rising health care costs is holding back small businesses from hiring, the Washington Free Beacon reports:

Thomas Secor, president of Durable Corporation, a small manufacturing company that employs 37 individuals, testified at the House Small Business Committee hearing that the Affordable Care Act has made providing health care coverage for workers more difficult.

"Health care is certainly one of the most vexing problems facing small businesses. The enormous costs and ongoing uncertainty surrounding our health insurance system is a major cause for concern," Secor said. "As a business operator, I am deeply troubled by the ongoing difficulties our health care system creates for my fellow small-business owners and their employees, and by the fact that the most recent national effort to reform the health care system has done very little to address the costs we, as small-business owners, face."

Secor represents the National Small Business Association, which has more than 65,000 members. According to one of the association's surveys, one-third of small businesses said they held off hiring due to high health insurance costs. One in four small businesses have chosen not to expand as a result of Obamacare and half of the businesses surveyed said they held off salary increases.

"Fewer and fewer small businesses, especially those with fewer than 50 employees, offer health insurance as an employee benefit," Secor said. "This is not because they do not want to, or cannot find an insurance carrier in their market; it is because they simply cannot afford to offer a plan."

Secor said that from 2013 to 2017, the average total cost per employee for health insurance coverage has increased by 51.7 percent. The business pays 70 percent or more of the cost of employee coverage.

Congress could give small business owners some much-needed relief by repealing these Obamacare taxes: The Health Insurance Tax; the Cadillac Tax; and the medical device tax.

That would be a good start in making health coverage more affordable.

About the authors

Sean Hackbarth

Sean Hackbarth

Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.

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