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Business simulations show negative impact on local jobs, revenue
Contact: Stephanie Cathcart, 202-314-2056
WASHINGTON, D.C.--January 28, 2009--In a study released this week, the National Federation of Independent Business Research Foundation analyzed the potential impact of a national employer mandate on small businesses to provide healthcare.
The study conducted business simulations to measure the effects of a hypothetical national mandate requiring employers to offer private health insurance to all employees starting in 2009, and to finance a minimum of 50 percent of the cost. The simulation ran six classes of business to determine the impact on employers of different sizes. The results show that an employer mandate would have significant negative impacts on local jobs and on state revenues, particularly considering the rising costs of health insurance.
"In the current environment, an employer mandate could wipe out 1.6 million jobs in just five years and reduce the GDP by around $200 billion," said NFIB Senior Research Fellow William "Denny" Dennis. "This research should alarm everyone about the consequences of costly mandates to small businesses. It is essential that our leaders take into account the drastic impact a mandate like this would have on the livelihood of small businesses and families in local communities."
"In our current economic environment, it is so important that we stimulate and support our country's job creators – small businesses. Enacting healthcare reforms that fail to address rising costs, and place unmanageable burdens on business, is not a viable pathway for meaningful reform," said Todd Stottlemyer, president and CEO, NFIB. "It is important that reform fosters growth and doesn't place undue burdens or new financial pressures on these small employers."
Healthcare premiums continue to skyrocket, increasing by nearly 130 percent in just eight years, and are, on average, 18 percent higher than those of large businesses. These unsustainable costs significantly hinder small businesses' ability to invest in and grow their business. Healthcare reform legislation must take steps to curtail costs for small businesses, individuals and the self employed by pursuing creative approaches to pooling, tax code parity, and improved, competitive insurance markets.
About the simulation model
NFIB used a proprietary Business Size Impact Module (BSIM) to simulate the impact of a national employer healthcare mandate on businesses by size of firm. The BSIM consists of a series of ten regional models designed to measure macroeconomic changes due to increased business costs. It receives inputs (new costs and spending) and generates outputs (macro variables) according to firm size. The unique capability of this model is important because often government policies have financial effects on businesses, and regulatory costs per unit are often higher on small firms than their larger counterparts.
The assumed mandate used in the study required that all employers must offer private health insurance to their employees, and that employers must finance at least 50 percent of their employees' health insurance premiums. The remaining share of employee premiums was assumed to be financed by employee contributions and federal subsidies. Implementation of the mandate is assumed to begin in 2009. Employment and output effects of the mandate were forecast for years 2009 to 2013, the first five years of program implementation.
To download a copy of NFIB Fact Sheet: Small Business Impact of a National Employer Healthcare Mandate; Price Sensitivity in Healthcare: Implications for Healthcare Policy; or a copy of the full report, written by Michael Chow and Bruce Phillips, visit the Publications section of the NFIB Research Foundation.
Solutions Start Here is a campaign developed and led by NFIB and its members as the small business platform for healthcare reform. By working to engage and educate policymakers about the unique healthcare issues faced by small business, Solutions Start Here will drive and integrate the concerns and needs of America's small business community into the national health reform debate. Because when healthcare is fixed for small business, it's fixed for America. For more information, visit www.FixedForAmerica.com.
NFIB is the nation's leading small business association, representing small businesses in Washington, D.C., and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB's powerful network of grassroots activists send their views directly to state and federal lawmakers through our unique member-only ballot, thus playing a critical role in supporting America's free enterprise system. NFIB's mission is to promote and protect the right of our members to own, operate and grow their businesses. More information is available online at www.NFIB.com/newsroom.
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