ACA: ‘Mom and Pop’ firms shunned

Since the birth of our great nation, small business owners have embodied the American spirit by giving so much of themselves to help our communities, give people jobs, and get us out of troubled economic times. As such, one would expect our politicians to make them their number one priority.

Sadly as we witness the Affordable Care Act unfold, we’re seeing the exact opposite. We’re finding “mom and pop” small businesses – indeed, our leading job creators – not just marginalized, but much of the time left out of the discussion altogether.

Speaker Pelosi’s attempt to assuage voters with her claim that “we have to pass the bill so that you can find out what is in it” is an insult to the three and a half million small employers here in California (and more than twelve million nationwide) who are now suffering from the deepest wounds of this damaging law.

“If they’d listened to their constituents and not big-moneyed interests, would we likely have a very different law?”

Make no mistake: small businesses strongly believe in access to affordable health care and in meaningful reform – and with good reason. Small businesses have seen their health care premiums skyrocket upwards of 107% from 2001 to 2011. Small businesses pay 18% more than larger corporations for the same health insurance products.

But the average corner bookstore, auto shop or coffee shop owner has yet to find that “grappling hook of hope” they desperately need to propel them out of the deep crater they’re lodged in right now. In California, it’s even more dismal as they confront the highest sales, income, and gas taxes, the most sweeping and costly environmental regulations, and scores of frivolous lawsuits. It’s no surprise or coincidence that nearly two million here are still out of work and CEO Magazine has ranked the once “Golden” State the worst place in which to do business for the ninth year in a row.

It makes small business owners ask, “What were our politicians’ priorities to begin with? If they’d listened to their constituents and not big-moneyed interests, would we likely have a very different law?”

As the federal website debacle continues and more and more Americans are finding their health insurance policies dropped, many Democrats and Republicans alike are right to scold Obamacare supporters for passing such a reckless law in such an irresponsible manner.

It’s unconscionable for the President and other proponents to claim they simply didn’t know about the severe after-effects of this law’s implementation. NFIB, twenty seven other states, and countless other Americans have made it abundantly clear for years that Obamacare was not the solution and that our leaders needed to push the pause button to do this right. People were screaming – our leaders just didn’t want to listen.

The Health Insurance Tax tax will cost ratepayers up to $400 billion by 2020 in new taxes, and is yet another classic example of our elected officials catering to powerful special interests while virtually pushing the mute button on our leading job creators.

And, to be clear, NFIB did everything possible to make noise: hundreds of thousands of small business owners pleading with their Washington representatives, countless stories in the media, and – most notably – spearheading the landmark lawsuit before the U.S. Supreme Court (NFIB v Sebilius)to challenge the constitutionality of the law. Despite small business’ loud voice and valiant effort, election-year politics tragically won that battle.

Was small business even remotely considered when Obamacare authors concocted the Health Insurance Tax, now expected to go into effect January 2014? This is a massive tax that falls primarily on the health insurance plans used by small businesses, but almost entirely exempts plans favored by big corporations, labor unions, and government. This tax will cost ratepayers up to $400 billion by 2020 in new taxes, and is yet another classic example of our elected officials catering to powerful special interests while virtually pushing the mute button on our leading job creators.

The ways that Obamacare hurts small business seem endless:

• A 3.8% surtax on investment income plus a 0.9% tax on wages over $200,000. Most small business owners file their taxes as individuals and this will hit them hard, especially since these two taxes are estimated to bring in a whopping $210.2 billion in revenues by 2019!
• Limitations on Flexible Spending Account contributions and an increase in the medical expense deductions threshold net the government another $28.2 billion in new taxes.
• A tax on premium healthcare plans that doesn’t start until 2018, but is expected to net $32 billion in taxes by the next year!
• A $2.7 billion tax on indoor tanning parlors,a $20 billion medical devices tax, and a $27 billion tax on name brand drugs.
• A penalty tax for individuals who choose not to purchase insurance.
• A perverse incentive to keep your business small by eliminating jobs to avoid major penalties. While larger corporations are already finding the massive costs of health care too much to handle – and are thus dropping their coverage in many cases – small businesses that may wish to grow larger than 50 employees in the future will now be discouraged from doing so. Obamacare actually decreases the number of critically needed new jobs!
• Healthcare exchanges that are difficult to enroll in. While the concept of a health care exchange is consistent with small business philosophy – more choice, competition, and the hope to control costs – their implementation has been fraught with problems. Covered California has worked hard and is further along than the feds or many other states, but much remains to be seen, especially with a very limited tax credit that expires in two years.

For these and many other reasons, small business owners are experiencing three common moods these days as they endure the shocks of Obamacare: fear, frustration, and sadness. They are terrified about the prospect of paying severely higher premiums when they have nothing left in the till. Their hearts break when they have to tell their dedicated veteran front desk receptionist, sous chef, or mechanic that they will no longer be able to offer them insurance – or, worse, they no longer have a job. They are furious that politicians told them along the campaign trail that they’re the economic engine, only to turn around and place Big Labor, Big Business and Big Government above Main Street’s interests. How ironic – our leaders hail small businesses as the backbone of our economy, but in fact lack a spine of their own when it comes to health care policymaking.

NFIB will continue to advocate for health care reform that lowers costs, restores and ensures small business certainty, and gets our economy moving again. And that begins with vigilant efforts to repeal or modify parts of the Affordable Care Act, which we’ll continue to do at the state and federal level.

While the majority of our members are disappointed that this terrible law remains in place and grows more challenging for them and many more Americans each day, we do recognize that it is the law for the time being. We urge everyone to talk to their brokers, attorneys, human resource specialists, and other trusted professionals to get the best information about this ever-changing law to ensure you are compliant.

Our politicians might have forgotten that small businesses are what makes our state and nation great and are among the first to feel the impact of Obamacare and any other pivotal law.

But NFIB has not.

If you are a small business owner or stakeholder, we urge you go to www. nfib.com/healthcare where you will find healthcare timelines, calculators, videos, as well as an opportunity to tell your healthcare story and get involved in the process.

Ed’s Note: John Kabateck is the executive director of the California chapter of the National Federation of Independent Business.


  • althink

    In another ACA complication, apparently small business owners must not only keep each business they own or participate in less than 50 employees, they must keep the total of all their business less than 50. See: Health care law’s aggregation rules pose a compliance nightmare for small businesses at http://www.washingtonpost.com/business/on-small-business/health-care-laws-aggregation-rules-pose-a-compliance-nightmare-for-small-businesses/2013/12/09/87b2dcc6-611d-11e3-bf45-61f69f54fc5f_story.html .

  • mthstar

    Yes make it affordable for small biz. I get tho that big biz health ins. co.s do NOT
    want that, but if enough of us keep pushing for it….such as, expanding Medicare for all.

  • mthstar

    While you and your counterparts were screaming “Obamacare was not the solution” and supported politicians that wasted taxpayer $ repeatedly bringing bills to the floor to end Obamacare, why weren’t y’all instead investing your time in representing small biz? Thankfully, Obamacare passed. Now use your time wisely to make the law better for all (small biz and the middle class). Ignore the interests that would like it to ‘go away’.

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