Small Business and ObamaCare
A new survey shows that employers will drop coverage and cut hours.
Nov. 12, 2013 7:04 p.m. ET
One of President Obama's proudest boasts about the Affordable Care Act is that it helps small business. The White House website says the health law "makes it easier for businesses to find better coverage options" and "stops insurance companies from taking advantage of you, giving the consumer and business owner more control and making health-care coverage more affordable." Small businesses aren't buying it.
That's the finding of a Public Opinion Strategies survey of more than 400 business owners with between 40 and 500 employees conducted in September and October for the U.S. Chamber of Commerce and International Franchise Association. Some 64% of small business franchise owners (such as owners of fast food and retail stores) believe the law will have a "negative impact" on their business, while only 5% expect a "positive impact." For non-franchise businesses the ratio was 53% negative and 12% positive. Only one in 12 agree with the President that the health-care law will "help" their business.
Even more problematic is how businesses are already responding to the new law. The White House continues to deny any relationship between hiring and ObamaCare. The poll finds 27% of franchise businesses and 12% of non-franchises have already replaced full-time with part-time employees in anticipation of the law's employer mandate. ObamaCare defines a full-time employee as someone who works 30 hours or more a week.
The survey also reveals that the "49er" effect is very real. These are businesses that will cap their full-time payroll workforce at 49 employees to avoid ObamaCare's insurance mandate for companies with more than 50 full-time equivalent workers. Of firms with between 40 and 70 employees, a little over half say they are likely to "make personnel decisions to keep" their "workforce below the threshold of 50 full-time employees and avoid the requirements and penalties associated with the new health care law."
More than one in four businesses (28%) say that in 2015, when the employer mandate is scheduled to take full effect, it is "likely" they will drop their insurance coverage and pay the penalty of $2,000 a year per employee. These are the plans employers and employees were promised they would be able to keep.
Opinion surveys are often unreliable predictors of how people will act in the future, but these findings do at least expose the widespread anxiety that businesses are feeling about ObamaCare's new costs. If the economy and business conditions improve and customer demand rises, employers may swallow these costs to expand their operations. But in an economy with nearly 20 million Americans out of work, discouraged from even looking for work or forced into part-time jobs, ObamaCare is making the search for employment all the more challenging.
One fix that might mitigate some of these negative employment effects would be to pass a law proposed by Senators Joe Donnelly (D., Ind.) and Susan Collins (R., Maine) to change ObamaCare's definition of a full-time job to 40 from 30 hours a week. Better still would be for Congress to repeal the law and pass a business and worker-friendly health-care reform.
