CNBC | SurveyMonkey Small Business Survey

Business owners are actually freaking out about the GOP health bill

Activists hold signs during a Stop 'Trumpcare' rally May 4, 2017 in front of the Capitol in Washington, DC.
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Activists hold signs during a Stop 'Trumpcare' rally May 4, 2017 in front of the Capitol in Washington, DC.

As Senate Republicans on Capitol Hill write health-care legislation behind closed doors to replace the Affordable Care Act and prepare to send it to a vote, they are losing support from a key constituency: business owners across the United States.

Small businesses consistently cite health care as a critical issue. Health care is second only to "jobs and the economy" among issues that matter the most to business owners, according to the new CNBC/SurveyMonkey Small Business Survey. It's especially important to owners of businesses with between 10 and 49 employees, according to the survey. The survey also found that the cost of employee health care is among the most "critical issues" business owners face, and concern increases for firms that have 10 or more employees.

More from the CNBC/SurveyMonkey Small Business Survey:
Business owners are confident about the economy
The No. 1 way business owners communicate to customers
Why entrepreneurs are big fans of Trump's tax plan

National polling reveals that a majority of Americans are now against the GOP plan to repeal and replace Obamacare, and surveys of business owners are showing a shift in opinion in line with the national consensus and influential lobbies, including AARP. President Donald Trump has expressed concerns about GOP legislation, calling it "mean" in a meeting with legislators about the original House effort.

Back in February, a month before the failure of the House effort to pass an Obamacare replacement, the online business marketplace BizBuySell surveyed 446 small-business owners on hopes for the Trump presidency. Forty-four percent of respondents called health care one of the top three issues they would like President Trump to address, beating out tax reform (43 percent) and jobs (30 percent). Sixty percent of those surveyed answered that they were in favor of repealing the Affordable Care Act.

The conservative leanings of small-business owners is not surprising — it is a demographic that skews to the right. Each year, the National Small Business Association publishes a Politics of Small Business report. The most recent results from 2016 found that 50 percent of small-business owners are registered as Republicans, 21 percent as Democrats and 19 percent as Independents or unaffiliated.

But as Republicans have struggled to gain broad support for a health-care overhaul, fewer small-business owners are looking at the issue in partisan terms, said John Arensmeyer, founder and CEO of the advocacy group Small Business Majority. "They're looking at it in terms of how it impacts their lives."

Main Street speaks out

The most recent survey by BizBuySell, released June 2 with 344 respondents, found that only 45 percent of small-business owners support the GOP-sponsored American Health Care Act. Forty-eight percent, meanwhile, answered that they find the GOP legislation hard to understand.

The reality is that the ACA has helped many small businesses afford the costs of employee health-care coverage.

Kris Kleindienst, longtime owner of St. Louis, Missouri-based Left Bank Books, said the business has always offered full coverage to its 12 full-time employees — which includes herself and her husband — even though costs posed a considerable financial burden. Kleindienst said staff is the "greatest asset" her business has, and as a result, she could never have imagined not providing it. But she said in the years leading up to the passage of the Affordable Care Act that commitment was "sorely tested."

"Deductibles were so high that most of us avoided seeking regular preventive care, let alone treatment," Kleindienst said. "The fact is, we did not think we could afford health insurance, but we tried to keep at least the catastrophic coverage. Our wages, including owners', were low. We sweated everything and put off repairs and expansion plans because we couldn't afford them."

When the ACA passed, Kleindienst and her husband, co-owner of the bookstore, were able to purchase a much better policy for the same price. Health insurance is still their single-highest overhead expense, at $80,000 a year. But if Congress repeals and replaces the ACA, Kleindienst said she doubts they will be able to afford even the most basic coverage, a fact that could "imperil our ability to stay in business."

"The ACA is not responsible for rising health-care costs. Congress' refusal to regulate the industry is at fault," she said.

"Small-business owners who are now dependent upon the marketplaces for coverage are scared to death that it might go away." -John Arensmeyer, founder and CEO of the advocacy group Small Business Majority

Prior to the law's enactment, small businesses and their employees comprised a disproportionate share of America's uninsured workers. According to the Employee Benefit Research Institute, the insurance-offer rate for firms with fewer than 10 employees — which compose 80 percent of all small businesses — was just 48 percent. In 2011, 70 percent of small businesses that didn't offer coverage cited that they simply could not afford it.

The CNBC/SurveyMonkey Small Business Survey, which includes a representative sample of small-business sizes and sectors, found that 78 percent of small businesses have 10 or less employees (61 percent have four or less employees).

"Before the ACA, if you wanted to start a business, you had to weigh that against the question of where you were going to get health care," Arensmeyer said. "That fundamental concern is the biggest single reason why the ACA really has helped small business and why small-business owners who are now dependent upon the marketplaces for coverage are scared to death that it might go away."

While the CNBC/SurveyMonkey data finds business owners bullish on the economy and sales outlook, only 27 percent plan to increase staff in the next year, which may be linked to political uncertainty.

Kleindienst and her husband are not alone. The Congressional Budget Office estimates that 14 million Americans will be left uninsured next year if the American Health Care Act is passed. According to the Robert Wood Johnson Foundation, an additional 1.5 million Americans would launch their own business due to the ability to find reasonable health-care coverage through the ACA.

"I think early on, small-business owners were skeptical about how much the law could really help them, especially since there was so much political noise," Arensmeyer said. "It's not that their needs or the feelings about their needs have changed. It's that they've seen how the ACA can help them, and it's made people realize, 'This can actually work. I don't want to lose this.'"

By Zachary Basu, special to CNBC.com