Small Businesses Still Waiting for “Affordable” in the “Affordable Care Act”

Washington, D.C. (PRESS RELEASE – March 26, 2011) – The Administration is celebrating the one-year anniversary of the “Affordable Care Act,” the massive health care reform initiative signed by President Barack Obama one year ago. Small business owners, however, are still waiting for the “affordable” part as promised by supporters of the new law.  Health coverage costs for small business owners continue to increase, and their choices in the marketplace remain limited or are shrinking.

“Small business owners and the self-employed were promised lower health coverage costs and more choices, but neither has materialized,” said Small Business & Entrepreneurship Council (SBE Council) President & CEO Karen Kerrigan.

In fact, according to Kerrigan, costs continue to rise and business owner anxiety has worsened because of confusion regarding how the new law will eventually impact coverage costs and options. To make matters worse, higher-income small business owners will get hit with a new tax next year while businesses with 50 or more employees will be required to provide coverage or face a tax penalty in the not-to-distant future.

“Business owners do not believe their health coverage costs will go down. Once federal regulators establish the content of the basic benefits packages and implement scores of other regulations, they believe their costs will soar even higher,” added Kerrigan. “The federal government has already backtracked on President Obama’s promise that Americans will be able to keep the coverage they currently have, and most small businesses do not qualify for the health care tax credit that is being heavily promoted by the Administration. For most small business owners, the law is useless,” said Kerrigan.

According to Kerrigan, the Administration is holding out the promise that the state-based exchanges will save the day. However, these exchanges will be regulated by the federal government in terms of the types of plans that can be sold including a “basic benefits” mandate, which Kerrigan predicts will be richer than what many small business owners currently provide. This will drive costs higher.

Furthermore, the new law includes new reporting requirements for small business owners.  In addition to the much reviled 1099 reporting provision – which vastly expands the paperwork burden on small business owners by making them file a 1099 with the Internal Revenue Service for every vendor they pay $600 or more on an annual basis —  there will be new obligations for reporting how much employers spend on each employee’s health coverage costs.

“There is no celebrating among small business owners today,” said Kerrigan. “Only deep consternation about soaring premiums, along with questions about how small business owners will compete and survive once the health care law is fully implemented,” she concluded.

About the SBE Council

SBE Council is a nonprofit, nonpartisan advocacy and research organization dedicated to protecting small business and promoting entrepreneurship.

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