President Obama announced Thursday that his administration would now allow health insurers to continue offering plans canceled under the Affordable Care Act for one year, hoping to stem the tide of public anger over millions of Americans receiving health care cancellation notices.
“I think it’s legitimate for (the American people) to expect me to have to win back some credibility on this health care law in particular and on a whole range of these issues in general,” the president said of the public’s anger over the botched launch of HealthCare.gov and the canceled health plans.
But for small businesses, many of whom are already making changes to comply with the law, there’s hope for a fix of their own.
“Obamacare is going to drastically increase our costs,” said Stephen Bienko, the owner of several College Hunks Moving Junk moving businesses. “We’re not going to lay anybody off, but we’re going to put a freeze on new hires.”
Bienko says to comply with the law he’s going to have to cut worker hours for some of his 72 employees with full-time status at his locations in Cleveland and New Jersey.
“It’s gonna force us to move some employees below 30 hours,” he said.
The Affordable Care Act requires businesses with 50 or more full-time employees to provide health coverage to all employees who work more than 30 hours a week or face a fine of at least $2,000 for each employee not covered. The Obama administration announced in July it was not going to penalize businesses that didn’t provide health insurance until 2015, saying they would delay enforcing the provision that was scheduled to go into effect in 2014.
For Bienko, there’s also a fear of losing good employees to other competitors who could offer more hours.
“We’re going to have to start cutting hours and we’re going to lose employees because of it,” Bienko said. “They just don’t seem to care about the repercussions for small business. You’re sticking this on companies that are trying to grow. Small business owners invented our economy.”
For Sean Falk, who owns Salsarita’s Fresh Cantina, Great American Cookies, and Mrs. Field’s Famous Brands franchises in stores in Michigan, Ohio, Kentucky, Tennessee, and Texas, the uncertainty of the law is the worst aspect.
“It has cost me time and effort,” Falk said. “I won’t expand any further. If I go beyond 50 full-time equivalents then it’s sort of like a cliff.”
Falk employs 75 workers, 46 of whom are full-time equivalents.
“It’s all about the uncertainty. Every month something changes,” he said, citing delays. “There’s no way for me to plan.”
“I fully expect some sort of the law will be there,” Falk added, holding out hope for a repeal but settling for a fix. “If I knew the rules were firm then I could make some sort of decisions.”
The concern about the law is one felt across small business. According to a July 2013 poll by the U.S. Chamber of Commerce, 49% of small businesses listed Obamacare as a challenge, dwarfing even over-regulation and economic uncertainty along the list of concerns. The same poll found 79% of small business owners thought Obamacare would make health care more expensive.
Indeed, in the blog post by the Treasury Department announcing the delayed enforcement for small businesses, the Obama administration cited concerns and feedback from businesses about trouble implementing the law.
“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” said Mark Mazur, assistant secretary for tax policy at the Treasury Department.
It’s a matter of numbers not adding up for small businesses, according to Jay Perron, the vice president of government affairs and public policy at the International Franchise Association (IFA), which works to enhance and promote franchises.
“We hear every day, the folks who are truly small business owners saying, ‘I don’t want to do this to my employees, but the numbers don’t add up,’” Mr. Perron said of cutting worker hours, in an interview with BuzzFeed. “This particular law is more difficult to comply with without finding ways to hurt growth.”
“There’s a fear about growth as they’re trying to figure out what’s required. There’s a fear about expanding,” he added. “It’s being seen across the country, employees are seeing hours reduced.”
A recent poll conducted for the IFA found that among businesses with 40 to 70 employees, 59% of franchise and 52% of non-franchise businesses are planning to make personnel changes to keep them below the 50 full-time equivalent employee threshold. The poll also found that 31% of franchises and 12% of non-franchise business were already reducing worker hours because of the law — more than a year before the coverage requirement even goes into effect.
Even the Teamsters president, James Hoffa, a traditional ally of the president, criticized the law’s requirements, saying in a letter to Democratic leaders in Congress in July unless a change was enacted, Obamacare would “destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”
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