When the Supreme Court takes up the issue of the constitutionality of the health care law this week, small business owners will be front and center in the debate.
The National Federation of Independent Business, along with 26 states, is among those challenging the constitutionality of the Patient Protection and Affordable Care Act.
The law, popularly known as Obamacare, passed nearly two years ago and scheduled to go into effect in 2014. Whether it does is now up to the Supreme Court, which will hear three days of oral arguments for and against it.
The NFIB is leading the challengeagainst Congress’ authority to mandate that all Americans have health insurance. While proponents of the law say because Congress regulates interstate commerce, and because health insurance companies operate across state lines, the law is legal, the NFIB, along with other critics say government is overstepping: It can’t require that people enter into commerce. And if the healthcare law is upheld, then what’s next?
Whether we will get the chance to find out is now up to the Supreme Court, which begins its hearing today and continues through Wednesday. The justices will release a ruling on the law by late June.
While the NFIB represents the interest of small business owners around the country, there is deep division in the small business community between those who are in favor of the legislation and those who are against it.
Those who disagree say the unintended consequences of the regulations will cost them money — money that could be spent on purchasing new equipment, or hiring more workers. Those who support the plan expect to reap savings while providing employees with affordable healthcare.
Karen Harned, executive director of the NFIB’s Legal Center, says the fear that healthcare premiums will rise hangs over the heads of many small business owners.
“The goal of this legislation was to increase coverage and decrease cost,” she said. "Those were the key things Congress was talking about. But small businesses are already seeing health insurance costs go up because of the law. Small businesses are worried that if we don’t prevail [with overturning the legislation], what does that mean not only for their own business but their individual liberty as well?”
Harned said some NFIB members report increases of 20 percent to 40 percent in premiums since the act was passed by Congress and signed into law by the president. They are also getting cancellation notices. “One in eight of those who have 50 or fewer employees who offer health insurance are hearing from their insurers that their plan is being canceled or will be canceled within the next year. That is directly tied to the law. The healthcare law is really an albatross around their neck.”
But there are those who say that healthcare reform is in the best interest of small businesses.
"These policies are aimed at helping small businesses," said John Arensmeyer, CEO of the small business advocacy group, Small Business Majority. "The law, while certainly not perfect, includes a number of provisions that will help small businesses gain access to more affordable coverage, which makes their businesses more competitive and boosts their ability to create jobs and drive economic growth.”
Mike Roach, owner of Paloma Clothing in Portland, Ore, and a 36-year member of the NFIB, said he welcomes healthcare reform to help shoulder the costs of healthcare. "The costs have been crushing us. If nothing was done about healthcare costs, we’d either have to cut benefits or lay off some of our employees — neither of which we want to do. The fact of the matter is the new law has already started helping us. We'll likely get more than $7,000 back this year from the small business tax credits.”
While businesses with less than 50 employers are exempt from the requirement to provide healthcare to its employees, the Act is already having an effect on healthcare, as states begin enacting laws in anticipation of its implementation.
And there are those who say those changes are already bad news for businesses. Bill Mitchell, President of iWorx Systems, in Dover, N.H., who has 20 employees, said he pays $100,000 a year in premiums for his employees and hopes the legislation is overturned.
“I would prefer to keep things the way they are because premiums may be more expensive for me as an employer after this," he said. "In the end it’s the responsibility of the employer to provide their employees with healthcare. Not the government. Businesses have a vested interest in keeping their employees healthy because they need them to advance their business.”
Mitchell added that the uncertainty surrounding the law has made it difficult for business owners such as himself to know how to budget.
“It is difficult to plan,” he said. “You have a bias against hiring people because you don’t know how much they are going to cost you. You tend to outsource things.”
"In the end it’s the responsibility of the employer to provide their employees with health care. Not the government. Businesses have a vested interest in keeping their employees healthy because they need them to advance their business."
In addition to holding off on hiring, some small business owners say they are losing precious man hours and productivity. Jim Murphy, President of EST Analytical in Fairfield, Ohio, said one highly paid executive now has the task of going through the hundreds of rules to make sure the company will be compliant if and when the healthcare plan is fully implemented. "About 40 percent of his job now is to go through this act and be on top of what is being rolled out when. That's a lot of money and resources being wasted."
And others are taking a wait and see attitude.
Rose Corona, a rancher and feed store owner in Temecula, Calif., is still trying to wrap her head around the law. Corona says until then, she is holding off providing health care benefits to employees.
"We have to plan two to three years out,” she said. “I'd rather pay the fine and wait to see how this act comes together so I can make an educated decision. There are many rules and regulations that have yet to be even written. How can I plan for that? Before I commit to anything I need to know all the parameters."
But many have already made up their minds. “Overturning the law now wouldn’t help us, it would hurt us,” said Paloma Clothing's Roach. “ We want the law fully implemented and even strengthened. Only then will we get some relief.”