The functionality of Healthcare.gov is far from the biggest problem facing the Affordable Care Act in coming days. If anything, the website's epic launch failure has overshadowed bigger concerns organizations representing the small business community have about Obamacare.
The National Federation of Independent Businesses (www.http://nfib.com), which went all the way to the U.S. Supreme Court to challenge the law, remains adamantly opposed to the legislation and is committed to its repeal. Two-thirds of the organization’s membership saw dramatic increases in coverage costs between 2012 and 2013 and “they’re the one sector of the economy that’s not in a position to absorb those,” says Cynthia Magnuson, Senior Manager for NFIB’s Healthcare Research Young Entrepreneur Foundation.
The cost of healthcare remains the single biggest issue for the small business members of NFIB , something that “has not changed in 30 years,” according to Magnuson. Her point is validated by three decades worth of annual surveys in which members listed it as their top concern.
A tax by any other name….
Businesses see no meaningful distinction between the fees (up to $3,000 per employee for companies with 50 or more FTers according to obamacarefacts.com that must be paid for not covering workers -- who would be offered the chance to get coverage on the government’s exchange program -- and higher taxes. In addition, businesses with 50 or fewer employees, while entitled to subsidies or credits for covering their workers, cite the problem of rising premiums along with the new annual burden of tracking and reporting compliance with Obamacare mandates. They say these raise overall business operating costs -- regardless of the small business employer credits.
In addition, money to help fund coverage for those who enroll through the government exchange, will cost employers $26 billion in 2014, but the price tag gets far worse over the next several years, or an estimated $118 billion by 2018, according to an analysis conducted by the IRS, often quoted by the Affordable Care Project (healthinsurancetaxhurts.org) a group formed by leading national trade associations to lobby for repeal of the law's ability to impose non-compliance fees on employers and individual citizens. ACP stipulates that naturally businesses will pass these costs along to the consumer, resulting in increases in average family premiums of $360 in 2014.
On the plus side, the nonpartisan Congressional Budget Office has estimated Obamacare will reduce the federal deficit by $100 billion in the first decade and possibly 10 times that in years 11 through 20, but that’s all based on predictive estimates of how the marketplace will react, which to date remains a huge question mark.
Opting to obtain coverage through the federal exchange is not open to all. Workers can opt out of employer coverage and seek the government-subsidized alternatives, but only in the case of individual plans where premium costs exceed 9.5 percent of income and where workers fall under 400% of the federal poverty threshold. Those with family coverage do not get a similar option and employer groups anticipate everyone else will pay higher premiums to account for those who opt out of employer plans to get government-subsidized coverage, something already anticipated in 2013’s higher premiums.
Reform ‘medicine’ not going down easy
Business organizations contacted about their own assessments of Obamacare cite difficulties:
- Poor service by the staff in Washington that’s administering much of the activity occurring through the healthcare.gov website. Files have been misplaced or lost and, according to the Pennsylvania State Chamber of Commerce (http://pachamber.org), applications that were being processed had to be resubmitted. “And that occurred in cases where brokers were handling the process,” noted Sam Denisco, the organization’s government affairs VP. “Imagine what individuals are going through attempting to do this on their own.”
- Many businesses – anticipating costs will go up -- already signed up early to renew their old policies earlier this year because insurers let them lock in premiums through the end of 2014. The fear is what will happen with healthcare costs when those plans run out, a sentiment expressed by both NFIB and the Pennsylvania Chamber. In a study done by NFIB, 64 percent of affiliated businesses reported their costs went up between 2012 and 2013, while the number is closer to 90 percent for PA Chamber members.
- The paperwork and administrative aspects of new law have created another burden for small businesses, many of which have had to outsource that responsibility, Magnuson said. “They’re the one sector of the economy that’s not in a position to absorb these costs.”
Missing seat at the table?
Obamacarefacts.com touts the law as a boon to businesses with fewer than 50 employees, but members of that community say they weren't consulted by the plans's architects. Leaders affiliated with the business federation claim the administration never invited them to roundtables or meetings on the subject. “It hasn’t happened,” said Magnuson
Some organizations aren’t sure if they even want a seat at the table. The American Senior Benefits Association, which evolved from an organization originally called the American Small Businesses Association and now provides free advocacy for the 50- and over population, hasn’t even taken a side on Obamacare. “Until we can measure the true impact of ACA, we feel it is premature to weigh in on whether it is positive or negative for our members,” explains the group’s executive director Eileen Mahoney Philbin. The group’s reluctance to get involved shows the level of volatility advocacy groups associate with the unfolding of Obamacare.. The waters may not be shark infested, but they will indeed be turbulent.
Next article in this space will examine the impact of Obamacare on the job market