Congress Reviews Affordable Care Act's Impact on Small Businesses
New Health Care Law Implementation Near
The Patient Protection and Affordable Care Act (ACA) was signed into law March 23, 2010, but its greatest impact will begin in 2014. Efforts to repeal the ACA have been made since the 111th Congress. There were 31 attempts to repeal the law in the 112th Congress alone. The U.S. House of Representatives has not voted on a repeal in the 113th Congress, but will at some point during this first session.
Despite these repeal attempts, it is unlikely that the ACA will be repealed and the law will be implemented with significant impact to some shops in 2014.
The U.S. House of RepresentĀatives Committee on Small Business has led the effort to identify specific concerns as to the ACA’s effect on the small business community. In a recent hearing on “The Health Care Law: Implementation and Small Businesses,” Rep. Sam Graves (R-Mo.), Small Business Committee chairman, noted, “Some provisions are already in effect, including a new tax on the sale of medical devices, new limits on tax-favored health spending accounts, and Medical Loss Ratio provisions. Next year, the employer mandate, the individual mandate, the requirement that employer plans cover a wide range of ‘essential health benefits,’ and the tax on health insurers, all become effective.”
The committee pointed out that all employers will be impacted in some way by the new law, including those businesses with 50 employees or less that are not subject to the mandate. For smaller employers, this may include reporting, notification and recordkeeping requirements.
Witnesses testified about the paperwork and regulatory burden placed on small businesses, but there are clearly other cost factors. In the committee’s implementation hearing, Douglas Holtz-Eakin, president of the American Action Forum, testified: “… The law contains new fees and taxes that negatively affect small businesses and their employees. Businesses with 50 or more employees are subject to a $2,000 per employee penalty if they do not provide coverage. This penalty includes businesses that have less than 50 full-time employees if they have a significant number of part-time employees.” He continued: “Notably, a business does not avoid the penalty if they opt to cover employees with plans deemed inferior to those offered in exchanges. Therefore, regulations dictate that small employers who offer plans that are ‘unaffordable’ or inadequate are subject to the full penalty.”
William J. Gouldin, owner of several garden centers in Richmond, Va., provided comments that were indicative of what many on the committee viewed as the problem small businesses are just beginning to face: “The employer confusion caused by this law is already causing higher unemployment and I believe that real unemployment will rise if a change is not made. I have tried to be aware of the language in the law, but very few businesses have any idea of what is in this law. But they are beginning to find out.”
The committee’s Subcommittee on Health and Technology followed with a hearing on “The Health Insurance Fee: Impact on Small Businesses.” Rep. Chris Collins (R-N.Y.) is the subcommittee chairman. In 2014, the ACA will begin to assess a fee on health insurance providers. Collins, in his opening statement, asked: “Why is this a problem for small businesses? The health care law exempts self-funded insurance plans from the fee, but it applies to fully funded ones. Small business owners typically do not have a large enough pool to self-insure, so they face higher premiums in a fully funded group plan – precisely the plans to which the tax applies. Of course, small business owners with more than 50 full-time equivalent employees have the ‘choice’ not to offer coverage – but will pay the employer mandate penalty.”
The Congress’ Joint Committee on Taxation estimated that a repeal of the fee would result in premium savings of 2 percent to 2.5 percent per year; an average family premium would be reduced by $350 to $400 in 2016.
The National Federation of Independent Business (NFIB) through its NFIB Research Foundation quantified these potential health care inflation rates and testified that we could see “a reduction in national private sector employment of 146,000 to 262,000 jobs in 2022.” NFIB also noted: “Fifty-nine percent of the job losses are forecast to be in the small business sector, a reflection of the health insurance tax’s incidence on the sector.”
The 113th Congress will see another run in the House of Representatives at repealing the ACA, but it is unlikely to receive any Senate consideration.
After the ACA became law, the Automotive Service Association (ASA) held an educational forum with health care experts at Automotive Service and Repair Week (ASRW). In preparation for the upcoming 2014 health care changes, ASA is hosting a more detailed program on what’s important in the ACA for independent automotive repairers at ASRW 2013 in Las Vegas. To learn more about ASRW|NACE|CARS, which will be held Oct. 16-18 this year, visit www.ASRWevents.com. (See also pages 26-27 of this issue for event highlights to date.)
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