The Unforeseen Consequences of Obamacare

Date: January 28, 2016 Last Edit: February 10, 2016

Small businesses can’t compete in a key area because of the ACA’s demands.

There’s no doubt about it: The Affordable Care Act has been bad news for small biz, wrote Justin Haskins in Heartlander Magazine: “Although numerous groups are facing difficulties related to ACA, few are struggling as significantly as U.S. small businesses.”

The vast majority (87 percent) of small businesses that offer “group healthcare” saw health insurance premiums rise by 25 percent since 2014, with 12 percent seeing premium increases of 50 percent or more, according to a survey by LevelFunded Health, an insurance agency.

Small businesses are at a significant disadvantage because larger businesses can more easily absorb higher health insurance costs, Haskins wrote.

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Haskins continued, “This has led numerous small businesses to cancel their health insurance benefits completely, dumping an unknown number of employees into Obamacare exchanges. This is not only bad for the employees, it’s horrible for the businesses, who are now losing quality job applicants to large corporations that offer better benefits.”

Losing out on Top Talent…

LevelFunded found that 56 percent of the 2,500 small businesses polled said they are losing quality employee candidates because of the rising costs associated with employer-provided healthcare plans under Obamacare. 

A lot of these pain points were supposed to be taken care of with the Small Business Health Options Program (SHOP) marketplace: “Employers with fewer than 50 full-time workers are eligible to buy coverage on SHOP,” USA Today reported. “The federal government even offers businesses an incentive, a tax credit worth up to half of an employer’s share of their workers’ premiums. Among the conditions: The firm must employ fewer than 25 workers and their average salary cannot exceed $50,000.”

But only 85,000 people from 11,000 small businesses had coverage through SHOP, according to Phil Galewitz of Kaiser Health News. “This is significantly less than the 1 million people the Congressional Budget Office expected to be enrolled in SHOP by the end of 2015,” Haskins said.

…Which Leads to Higher Prices

“The failure of ACA, and SHOP specifically, to provide small businesses with cost-effective health insurance options for their employees is not only causing small businesses to lose quality employees or potential employees to larger companies, it’s forcing small businesses to choose between offering health insurance for employees or raising prices for their customers,” Haskins argued.

To avoid any potential penalties associated with the 50-employee rule, small businesses are choosing to outsource many of their jobs to online freelancers, rather than hiring more staff, wrote Susan Wilson Solovic on HuffPost Business. 

“Wanting to keep head count low for profitability and to stay under 50 employees due to the requirements of the Affordable Care Act, small business owners will turn to the Internet to use the services of online freelancers,” she said.

JOIN THE FIGHT: Read NFIB’s position on how the right kind of healthcare reform can help your small business.

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