Gauging the Impact of Obamacare on SMEs

The signature legislative achievement of President Obama’s tenure, the Patient Protection and Affordable Care Act (aka Obamacare), was born without a single Republican vote in Congress and nurtured to fruition by the Supreme Court of the United States. The impact on small and medium size business will force many CEOs to make difficult choices.

June 12 2013 by

Businesses employing 50 or more full-time workers don’t have the luxury of an exemption. Organizations that don’t provide adequate health-insurance coverage for their employees may, in the words of the administration, “face employer responsibility requirements.” Michael Ramlet of the American Action Forum predicts compliance with the Affordable Care Act will cost employers more than $50 billion between now and 2020. Ramlet states that not only will the penalties keep small businesses from expanding beyond 50 employees, it will encourage large employers to drop employee-sponsored health insurance to as many as 35 million Americans.

The Ohio Department of Insurance announced that, based on the rates submitted by insurers to date, the average individual-market health insurance premium in 2014 will come in around $420, “representing an increase of 88 percent” relative to 2013. Dave Dysinger, who runs a growing manufacturing business in Dayton, is worried about being subjected to the employer mandate as premiums in Ohio rise, according to the Dayton Daily News:

“Dave Dysinger of the Dayton-based precision machine business, Dysinger Inc., said business is booming, putting pressure on the firm with just under 50 employees to expand its workforce.

But if the company crosses the 50-worker threshold, it would be forced to comply with the provisions of the health care law or pay a fine.

The cost of insurance could skyrocket if Dysinger brings on a fresh new crop of younger workers, but the law would limit how much of that cost he could pass onto his employees in the form of deductibles, co-payments, and coinsurance.

“I am very concerned about what’s going to happen with the cost of health care,” Dysinger said. “But I’m going to save my whining until I actually see what’s going to happen.”

Wisconsin chief executive officers said they are pessimistic about their companies’ prospects in the second half of 2013 largely because of what they call the uncertainty created by the Affordable Care Act and overall political dysfunction in Washington, D.C., according to a new survey by Wisconsin Manufacturers and Commerce. “The responses are stunning and tell a tale of significant concern among business leaders at this moment in our nation’s history as we move to the health care entitlement,” the organization’s CEO Kurt Bauer told The Business Journal. Increased health care costs will be passed on to employees, Wisconsin CEOs report. Fifty-four percent of CEOs said their company will increase employee contributions and 28 percent report decreased benefit levels.