Small Business’s Introduction to the Affordable Care Act, Part 1
A new healthcare longitudinal survey by the NFIB Research Foundation 2013
In a new survey of 921 small business owners and operators from around the country, 64% reported that they pay more for insurance premiums per employee in 2013 than they did in 2012. For a population of job creators that has consistently identified the “rising cost of health insurance” as its No. 1 business problem for close to 30 years (source), Obamacare has failed to address this most important of small business concerns.
“The law’s authors were primarily focused on increasing insurance coverage and expanding benefits — they gave little or no consideration to concerns about cost or who would foot the bill. Ironically, had they instead made reducing costs a priority, this would have been a natural incentive for increasing coverage,” said NFIB Research Foundation senior fellow and study author William J. Dennis. “Unfortunately though, this single-minded approach resulted in a law with a rising price tag, and Obamacare’s authors failed to consider that someone has to pay for all the bells and whistles included in the law. That ‘someone’ it turns out is often the small business community—small employers, their employees and their families.”
The new healthcare study is the first segment of the three-year longitudinal look at how the healthcare law will impact the small-business community. The same owners will participate in each survey over its three years course; this unique approach to researching will allow NFIB to measure the impact of the law on small firms throughout the implementation process.
Highlights from the Study:
► The health insurance premium costs incurred by small businesses (employer and employee shares) average $6,721 a month ($80,652 a year). The median cost is about $3,500 every 30 days. Deductibles for beneficiaries of small business health insurance products also rose in 2013. While two of three (67%) of plans maintained deductibles at the prior year’s level, another 28 percent increased deductibles; only 4% lowered deductibles in their plans.
► The most frequent means of defraying increased costs was for small employers to lower profitability (66%), followed by increased productivity (48%), and the delay, postponement or elimination of business investment (40%).
► Many small-business owners are getting their information about the healthcare law from a historically unlikely source: the news media: 42% of small employers reported that the news media was their primary source of information about Obamacare, which is atypical of a community that usually ranks the news media near the bottom of its preferred business information sources. The government, as a source of information about the law, held the bottom position with only 4% of owners naming it as their most important source.
► 14% of non-offering small employers provide reimbursement or a direct payment to employees for the purchase of health insurance.
► 4% of non-offering small employers within the last 12 months experienced employee requests to provide health insurance.
► As many as 150,000 small businesses may be subject to the so-called “aggregation rules”, that is, rules requiring owners of more than one business to consolidate employment in all of their businesses for purposes of reaching the 50 full-time equivalent employee employer-mandate threshold.
► There is no rush to self-insurance, despite ACA’s incentives to do so; but, interest is rising. Four percent of small employers currently offering health insurance self-insure, with those employing 20 – 49 people doing so in 7% of cases and those employing 50 – 100 people in 13% of them. Four percent say a switch from the fully-insured market to self-insurance is “highly” likely in the next 12 months; another 7% say it is “somewhat” likely.
► Small employers often pay the entire health insurance premium for their employees, 38% for individual coverage, 23% for family coverage and 21 percent for plus-one coverage. A clear association appears between employee participation and the size of the employer cost-share. The more employer pays (on a percentage basis), the more employees are likely to participate.
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Source: NFIB Research Foundation.
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Source: NFIB Research Foundation.