For several weeks, the Small Business Committee has examined different aspects of the health care law that are decidedly unfriendly to small businesses: the cost, the uncertainty, the new requirements, a fledgling SHOP exchange, and cancellations of coverage.

On Wednesday, we heard compelling testimony from small business owners who may be forced to offer health coverage to their employees despite having fewer than 50 workers in any one business. The reason is that under the law, largely unrelated businesses that are managed separately can be considered as one when there’s an element of common ownership, treating very different ventures essentially as though they are a single business. As the Wall Street Journal reports from our hearing, the rules could be applied to group a dairy farm with an accounting and retail business, even if the part-owner has no day-to-day management role. 

This policy discourages investment, dampens hiring, and hinders competitiveness. And, it is one more major headache for small businesses as a result of this far-reaching law. This aggregation policy needs to be thoroughly reexamined.

Sincerely,

Sam Graves
Chairman

Latest Committee Action

On Tuesday, the Subcommittee on Investigations, Oversight and Regulation, under the chairmanship of Rep. David Schweikert (R-AZ), examined the effects of the regulatory burden on small financial institutions, namely banks and credit unions. The hearing specifically analyzed the impact of the Consumer Financial Protection Bureau and Basel III capital standards, among other financial regulations, finding that choices for consumers and small businesses are being limited as the number of banks decreases and one-size-fits-all regulations limit flexibility to make loans.

On Wednesday, the Committee considered the health care law’s application of the business aggregation rules and the concerns they raise for small businesses. The health care law requires businesses that employ 50 or more full-time or full-time equivalent employees to offer health insurance to their full-time employees. One critical issue is the definition of “employee,” while an equally important issue is determining which employees are attributed to the business. The answer may be simple for one business with a single owner. However, when an individual shares ownership of multiple entities or with multiple owners, some of them family members, the answer is less clear. Under the presiding chairmanship of Rep. Chris Collins (R-NY), Chairman of the Subcommittee on Health and Technology, the Committee heard the testimony of concerned small business owners, examined the administration’s process, and heard suggestions on what changes to the rules could be considered to reduce confusion.

On Thursday, the Subcommittee on Economic Growth, Tax and Capital Access, under the chairmanship of Rep. Tom Rice (R-SC), examined the current state of lending for small businesses and their access to functional capital. Recently, there has been an increase in the number of small loans issued, with 1.7 million more loans under $1 million issued in the second quarter of 2013 than the same time period in 2011, but overall, the number of small loans has not returned to pre-recession levels. Factors include reduced levels of demand and creditworthiness of borrowers, increased regulatory scrutiny on banks, and consolidation in the banking industry. According to the Federal Deposit Insurance Corporation, the number of banking institutions in the U.S. has fallen to its lowest level since at least the Great Depression, and many of the smallest banks have merged or closed.

News from Washington

On Wednesday, by a vote of 254-159, the House passed the Small Business Capital Access and Jobs Preservation Act (H.R. 1105). Chairman Graves welcomed the legislation because it reduces burdensome regulatory requirements on small and mid-sized private equity funds that often invest in small businesses. The legislation exempts private equity funds from expensive new SEC registration requirements imposed by Title IV of the Dodd-Frank Act. Private equity-backed companies employ over 7.5 million people nationwide in over 17,700 U.S. firms and have invested over $3.6 trillion in businesses in ten years. 

On Thursday, by a vote of 325-91, the House passed the Innovation Act (H.R. 3309). Patent trolls pose a significant threat to small innovators, as small firms do not have the resources or background to fight false patent infringement claims. Over this past year the Committee has heard directly from businesses about the negative effects patent trolls have on startups and small companies. In a hearing in May, a small telecom company’s owner testified that his firm had spent $45,000 to defend against a claim by a patent troll, even before a trial had occurred. This bipartisan legislation promotes innovation and better protects small businesses by curbing abusive patent infringement litigation.

One more Obamacare headache for small business 

By Sam Graves

• Bloomberg BNA: Health-care law business aggregation rules cause confusion for small businesses
• Fiscal Times: Obamacare fixes hide a big mess on the back end
• New York Times: Poll finds young people souring on health law and Obama
• Politico: Poll: 28% would rather pay fine
• CNN: 3 questions the Obama administration won't answer about Obamacare
• The Hill: Chamber war on 'vast regulatory state'
• Entrepreneur: Latest Obamacare delay means small businesses will have to wait. Again.
• Businessweek: Why the long wait for a new SBA chief?
• ABC News: New Obamacare headache: Is your enrollment real?
• New York Times: Insurers claim health website is still flawed
• Washington Post: Obama administration delays small business exchange again; won’t be ready until late 2014
• New York Daily News: Small business hiring increases slightly in November

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