Small businesses fume, now seeing 'Obamacare' as unavoidable
Election 2012 ended hopes among small businesses that Obama's health-care law would be upended. Papa John's and others are threatening layoffs and higher consumer prices, citing added costs of doing business under 'Obamacare.'
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Revenues from companies that elect to pay the $2,000-per-worker penalty are to be used to offset government costs of operating state-based "exchanges" where uninsured workers can shop for affordable health insurance. As of Friday, 22 states plus the District of Columbia have agreed to operate the exchanges, while 14 have refused, deferring to the federal government. Fourteen have not decided.Skip to next paragraph
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Companies can avoid penalties for not providing healthcare coverage if they cut worker hours from 30 to 29, says Christine Eibner, a senior economist at RAND Corp. in Arlington, Va. They also can opt to provide coverage, which workers might prefer in place of over steady wage increases over time.
Which option businesses choose “varies a lot depending on the firm, what workers look like depending on what their incomes are and their ages and health- care status. It ultimately will get down to what workers will benefit from more, Ms. Eibner says. Some, for example, will be eligible for health-care coverage on the state-run exchanges and won’t want the employer to offer coverage.
Although some say slashing hours will hurt productivity, the opposite might occur if companies decide to avoid penalties by keeping their hours intact and providing coverage, says David Weissman, head of the Employment Law and Managed Health Care Law Practice at Rose Law Group in Scottsdale, Ariz.
“If coverage is extended to those employees who did not previously have health insurance, the company may have healthier, happier employees who are more likely to stay with the company," Mr. Weissman says. "This may lead to greater productivity by those employees, which could then result in increased profits for the company as a whole.”
The drumbeat against Obamacare is sounding particularly loud this year because of the election season – and that has created misconceptions about the law, says Rhett Buttle, national outreach and governmental affairs director for the Small Business Majority, a trade group in Washington.
“We just came out of campaign season and there was tons of political rhetoric, and the health-care law was fueling it, unfortunately. Our position is that it is time for folks to understand the law and how it affects them,” Mr. Buttle says.
A July poll by Buttle’s organization, of 800 small businesses in eight states, found that half of them want to see minor changes in the new health-care law, while 34 percent want it overturned. When respondents learned more about Obamacare's specifics, those that wanted the law to remain intact widened to 56 percent, while those wanting its repeal dropped to 28 percent.
Meanwhile, the National Restaurant Association released a statement to FoxNews.com Thursday saying it's “premature to make a specific assessment of exactly how the law will affect any individual business because there are so many details that are unknown.”
A study last month by the Urban Institute, a public policy think tank in Washington, found that if the ACA were implemented in 2012, the number of people covered by employer-sponsored insurance would increase only 2.7 percent, from 151.5 to 155.6 million. Employer spending per person insured would decline 7.3 percent for small businesses (those with 100 or fewer employees) and remain unchanged for large companies (more than 1,000 employees). For midsize companies (those with between 101 and 1,000 employees), costs would increase 4.6 percent, mainly because companies of this size traditionally are less likely to provide coverage.