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The Small Business Case for Repeal and Replace

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Washington, January 13, 2017 | comments

The Small Business Case for Repeal and Replace

For years, members of the small business community have been testifying before the House Small Business Committee on the failures of Obamacare and the reasons it needs to be repealed and replaced. 

House Republicans have been listening to them all along. The House has passed legislation that will clear the way for the repeal and replacement of Obamacare.

These Small Business Committee witnesses made the case for repeal and replace far better than any politician could. Here are their stories:  

Tom Secor, the president of Durable Corporation, a small business based in Norwalk, Ohio, who appeared on behalf of the National Small Business Association

“Fewer and fewer small businesses, especially those with fewer than 50 employees, offer health insurance as an employee benefit. This is not because they do not want to, or cannot find an insurance carrier in their market; it is because they simply cannot afford to offer a plan.” 

When Committee Democrats pressed Mr. Secor by insisting that his business had more health insurance options under the ACA, he countered: “Actually, we got less.  We had one carrier that was willing to offer insurance, that’s what our insurance agent told us. I’m in a rural section of Ohio and I think that’s part of the difficulty. In the state of Ohio, we have 88 counties. We have what I’ll call three major cities – Cleveland, Columbus, Cincinnati… but most of Ohio is rural so we don’t the kind of coverage. If you’re in Cleveland, Columbus, Cincinnati, you have options. We do not.”

Keith Hall, President and Chief Executive Officer of the National Association for the Self Employed

“It is important to understand that our members view their health insurance purchase as a business decision and unfortunately the self-employed and micro-business owners currently do not receive the same tax incentive as other businesses," 

Therefore, the self-employed business owner is caught in the middle because they don’t typically qualify for subsidies, while also not receiving the same favorable tax treatment as other businesses... Today we are focused on solutions and we certainly appreciate the opportunity to provide our commentary on the current climate and how legislative action could both stabilize and foster a robust health care system that is rooted in three principles: quality, accessibility, and affordability,”

Kevin Kuhlman, Director of Government Relations for the National Federation of Independent Business

“These consequences led to a significant 25 percent reduction in the offer rate for small businesses between 2010 and 2015. For the first time, fewer than 30 percent of businesses with under 50 employees offered health insurance to their employees in 2015. Small business was clearly an afterthought during ACA consideration and implementation.” 

“As Congress considers a partial repeal of the ACA through reconciliation and a repair of the health insurance markets, please prioritize affordability, flexibility, and predictability for small businesses. Health reform that works for small business will work for the rest of the country," 

“I think there are a lot of plans out there. I’ve read the Better Way plan and there are many things in there, we agree with.”

Harold Jackson, the Executive Chairman of Buffalo Supply, a small business based in Lafayette, Colorado 

“I understand that most tax credits are designed to incent or change behavior and - to be clear - we have always provided health insurance for our employees. But the fact is prices have increased so dramatically year after year that we may not be able to continue to provide health insurance in the future …. Because we are ineligible, this tax credit does not help me in any way to provide affordable health coverage to my employees now. And unfortunately, it will not encourage me to do so in the future - if and when - I may be forced to stop offering insurance because of prohibitively escalating costs.”

“Based on my experience, I think part of the problem is that the rules for the tax credit are so confusing that small businesses cannot assess benefit of the tax credit without hiring outside counsel. Ultimately, any changes should not only increase the tax benefit to help small businesses provide health insurance for their employees, but must be simple and easily understood.” 

Michael Ricco, the Quality Manager of AEEC, LLC, who testified on behalf of the U.S. Women’s Chamber of Commerce

“While I would like to testify today that my company has been able to benefit from the Small Business Health Care Tax Credit, that is unfortunately not the case because we are ineligible…We, as a small business, want to do the right thing and provide health care coverage for our hard-working employees."

Holly Wade, the Director of Research and Policy Analysis for the National Federation of Independent Business (NFIB) Research Foundation

“Small business owners rank the cost of health insurance as the most severe problem in operating their business out of 75 potential issues, with 56 percent of small business owners finding it a “critical” problem The high cost of health insurance is the main reason owners do not offer employer-sponsored health insurance and the main reason owners discontinue providing the benefit. And for those offering, many owners annually confront the arduous task of adjusting profit expectations, insurance plans, cost-sharing and other mechanisms to help absorb often erratic changes in total premium costs.”

Deborah Walker, CPA, National Director, Compensation and Benefits, Cherry Bekaert, LLP, Tysons Corner, VA

“[T]he mechanical tests used for qualified plan discrimination testing are overly complex and understood for only a limited number of tax professionals. A small business would not be able to apply those rules without professional help and many of the advisers to small businesses would not be familiar with the rules.”

Ellis Winstanley, Chief Executive Officer, Tradelogic Corporation, Austin, TX, testifying on behalf of the National Restaurant Association

“The impact of the aggregation rules, and hence our status as an applicable large employer, will have an impact on each of our businesses. Simply, the cost of doing business for each will increase, yet they must be able to stand on their own. Labor costs are typically one-third of a restaurant’s expenses. Operators only have a finite dollar amount to spend on labor costs given thin margins, including employee benefits such as health insurance coverage, and must manage these costs closely to remain viable.”

Donna Baker, CPA, Donna Baker & Associates, Adrian, MI

These rules could cause employers to delay growth, manipulate ownership percentages or limit employees to less than 30 hours, discourage small businesses from investing in other businesses, and require health insurance coverage in industries where this is not the norm, which will affect a business’s ability to compete.”

Michael W. Ferguson, President and Chief Executive Officer of Self-Insurance Institute of America in Simpsonville, SC

“We believe it is fair to say that the law has created added uncertainty in the health care marketplace and contributes to more acute cost fluctuations, at least in the short run. So in this current post-ACA environment, self-insurance does provide smaller organizations more certainty in their ability to be able to continue to provide quality health benefits along with will providing them better costs containment capabilities.”

Ms. Robin Frick, Combined Benefits Administrators, Inc., Madisonville, LA, testifying on behalf of the National Association of Health Underwriters

“Our membership reports almost universally that the looming PPACA-related market changes are causing significant anxiety within the employer community. Employers large and small are looking at all possible ways to gain greater control over their employee benefit options. We believe this need for control has sparked a greater interest in the possibility of self-funding among the small and mid-sized employer community.

It’s also causing employers of all sizes to reduce the hours of certain types of workers and consider the possibility of dropping coverage altogether. As the implementation of PPACA moves ahead in the coming year, we hope that Congress and this committee will consider providing additional flexibility to employers of all sizes to help relieve their anxiety and ensure that they can continue to provide affordable and stable coverage options to employees.”

Thomas Faria, President, Sheffield Pharmaceuticals, New London, CT

“While switching to self-insurance provided a new set of challenges and has at times been a bit nerve racking in high utilization years, our decision to self-insure has been a good one. Based on estimates of the yearly average increases that the traditional health care plans charged in Connecticut for plans of our size, we believe that self-insuring saved the company over $400,000 over the span of four years.”

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Tags: Health