William Dennis, NFIB: PPACA Health-Care Law Resulting in Higher Costs for Small Business Employers and Employees

July 30, 2011

In testimony before the House Small Business Health Care and Technology Subcommittee, Senior Research Fellow William Dennis detailed the initial toll of the health care law on small-business owners and their employees a year after becoming law. Dennis recently conducted a new study of the National Federation of Independent Business (NFIB) membership to gauge the impact of the health-care law on small business.

Small Business and Health Insurance: One Year After Enactment of PPACA PDF

“Twenty percent of small employers currently offering expect to significantly change their benefit package and or their employees’ premium cost-share the next time they renew their health insurance plans,” said Dennis. “Almost all significant changes expected involve a decrease in benefits, an increase in employee cost-share, or both.”

The pledge that the health-care law would not prevent Americans from keeping their current coverage if they chose to do so has so far not translated to some small-business owners who have already been informed that their current plans are no longer an option for future coverage.

“Since enactment, one in eight (12 percent) of small employers have either had their health-insurance plans terminated or been told that their plan would not be available in the future. Plan elimination is the first major consequence of PPACA that small-business owners likely feel.”

Additionally, the NFIB survey of small-business owners revealed their prognosis of the effect that the health-care law will have on their bottom line, and to them, it means higher costs and lower quality of care.

“By overwhelming margins, small employers who have some knowledge of the new law think that PPACA will not reduce the rate of health-care (insurance) cost increases, will not reduce the administrative burden, will increase taxes, and will add to the federal deficit,” said Dennis. “They agree that PPACA will result in more people having health-insurance coverage, but do not think it will yield a healthier American public.”

One year after the passage of sweeping health-insurance reform legislation, the lasting impact of the new health-care law on the small-business community remains to be seen. However, according to NFIB’s study, the overwhelming majority of small-business owners do not expect the law to reduce cost or regulatory burdens, and nearly two-thirds agree that the law will result in premium increases but not in better care.

Healthcare and Technology Subcommittee Chairwoman Renee Ellmers (R-NC) said of the Patient Protection and Affordable Care Act (PPACA):

“Despite the President’s promise that Americans will be able to keep their current healthcare plan, his own administration has predicted that over half of all employers and nearly 80 percent of small firms may be driven out of their current healthcare plans and forced to switch to higher-priced plans or penalized for dropping insurance altogether. The new healthcare law is not even fully implemented, yet the uncertainty created by it is already having a detrimental effect on small businesses and the economy.

“As we heard in today’s hearing, small business owners who want to expand and hire more workers can’t because they will need the capital to comply with the plethora of new healthcare regulations. In fact, some will even be forced to lay off workers in order to make ends meet.

“Reforming our healthcare system with common-sense principals that will lower costs and increase access is greatly needed; however, we must do this without a government takeover of healthcare filled with job-killing mandates. With unemployment on the rise, we must remove the mandates, taxes and regulations that are holding our job creators back.”