Small Business

Main Street braces for rising health-care costs

President Barack Obama vetoed a bill Friday that sought to repeal his hallmark health-care law. The move follows the House's push to undo the Affordable Care Act and defund Planned Parenthood.

Repealing Obamacare is off the table for now. But many small business owners continue to grapple with rising health-care costs into the new year, as the multiyear mandates and potential fines roll out for Main Street businesses.

President Barack Obama
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For the first two years of the Affordable Care Act, small businesses were mostly spared from fines. The two-part employer mandate portion of the law kicked off in 2015 and required businesses with 100 or more full-time employees to offer coverage or face penalties of $2,000 per worker per year for failing to comply.

The mandate is now expanding in 2016 to include those businesses with at least 50 workers. Full-time workers are considered those who work 30 or more hours a week. "Without fundamental change, the law will continue to drive up costs and make providing coverage more complex," said Dan Danner, chief executive of the National Federation of Independent Business.

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NFIB research from November showed 63 percent of small-business owners reported higher premiums between July 2014 and 2015. Of those experiencing higher premium costs, nearly 60 percent had average employee increases of more than 10 percent last year.

"Small business owners fought the law all the way to the Supreme Court and will continue to support its repeal and replacement," Danner said in a statement.

Immediately into the new year, congressional Republicans had gotten the bill to Obama's desk.

GOP presidential candidates, meanwhile, are likely to continue running on a platform of repealing Obamacare, and replacing it with a mostly unspecified alternative. Past efforts by GOP leaders in Congress to find a consensus replacement bill have failed, but House Speaker Paul Ryan has pledged to produce a Republican health plan.

Seeking workable reforms

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For Main Street, health-care costs overall remain a key issue as small companies strive to grow their businesses and hire more workers after the deep recession. "This is not how we preferred it to be done," said Molly Day, a spokeswoman for the National Small Business Association. "But we do have key reforms that need to be made more workable for small firms."

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For example, Day cited the health-insurance tax. Known as HIT, the tax raises the cost of small-business health-insurance premiums. HIT "will be passed on more to small businesses as they are fully insured, versus large firms that are self-insured," Day said.

The employer mandate is another cause for concern among members, Day said, with 1 in 4 small businesses saying they're "purposefully not growing" because of the mandate.

Supporters of the Affordable Care Act say the measure is long overdue, and that employees with health insurance can help boost employee retention and recruitment efforts.

But other Main Street groups disagree. "I don't know that it's adding to confusion, but potentially to frustration," Day said. "I don't know that small-business owners are in a better position than they were five years ago with our health-care system."