Healthcare Costs Remain an Unsettling Arena for Mid-Market Business Owners

But the implementation of the massive overhaul of healthcare insurance and medical care continues to create huge ramifications for middle-market companies and their leadership, forcing major changes that are both strategic and tactical in how leaders run their businesses.

And many mid-market CEOs and company owners remain wary of as-yet unrealized possibilities, such as the prospect that the U.S. Supreme Court could, by the end of June, invalidate subsidies to more than 7.5 million Americans who bought health-insurance plans on the federal exchange.

Mid-market owners also are bracing for the strong possibility of health-insurance price increases for companies of their size, based on expected huge boosts that are in the pipeline for smaller companies based on requirements for what their health plans must cover and how they are priced, which are set to take effect on January 1.

Even executives of mid-market companies in the healthcare business recognize that the Affordable Care Act remains a destabilizing factor for their employees and for the American public, despite its stated intentions. About 69% of executives polled recently by CIT Group Inc. believe that healthcare costs remain too high, and 35% believe that Obamacare still will be repealed.

David Gronewoller exemplifies mid-market business owners who are trying to cope with the changes Obamacare is bringing. The Winston-Salem, N.C.-based owner of 12 franchised Golden Corral restaurants pared his company’s workforce by 25 percent to 30 percent in large part as a reaction to Obamacare over the last couple of years.

But in the process, he said, he has been able to shape his workforce into a smaller group who works longer hours and “has more skin in the game. We had a lot of people who weren’t paying attention unless they got overtime; they didn’t care. So we added several thousand dollars a year in direct labor costs, set some job-performance standards, and now we’ve got fewer but better employees. And I don’t intend to add employees unless we’re growing the business.”

Meanwhile, at the end of last year, 88% of middle-market executives polled by the National Center for the Middle Market identified healthcare as the “top challenge” facing their companies, edging out other contenders including the cost of doing business (84%) and the ability to grow revenue (82%).

The best news on that front: Mid-market owners’ concerns about healthcare costs didn’t increase over the last half of 2014, according to the Center. And there have been indications that such concerns actually have eased so far in 2015. But the Supreme Court could upset the apple cart again with a huge Obamacare decision later this year, much as it did two years ago.