It’s not just Senator Baucus who is worried about how health reform is affecting our nation’s smaller employers. The House Small Business Committee held a hearing to discuss PPACA implementation this week too. During opening remarks, Chairman Sam Graves (R-MO) expressed serious concern over the impact of employer rules, high costs and inevitable staff cuts that will occur as a result of the health reform law. Ranking Member Nydia Velazquez (D-NY) acknowledged the fact that insurance premiums under the health reform law are likely to increase but wanted to discuss ways to improve the take-up of small business tax credits.
Many of the committee’s concerns regarding the impact of PPACA on small businesses echoed many of NAHU’s. Specifically, Doug Holtz-Eakin, former director of the Congressional Budget Office, noted that we are still unaware of the true economic impacts of the law. He stated that the law will cost “$24 billion and 80 million hours of paperwork… Eighty million hours of paperwork time spent complying with those regulations, to give you some perspective, that’s 40,000 full-time employees filling out paperwork for a year nonstop.”
A small-business owner who, on behalf of NFIB, testified at the hearing said that the 30-hour requirement is the most detrimental employer requirement because many employers will cut hours to employees so they don’t have to pay the benefits. It is not that the employers do not necessarily want to offer their employees coverage; it is that they cannot afford to. The CFO of another very small business also testified during the hearing. In this case, however, the small business applied and received tax credits made available under PPACA. As a result, for the first time ever, this company’s costs went down 12%.
The law’s unpredictability was discussed, specifically in terms of the challenges it poses to consumers and small businesses. If the law itself is not stable, it becomes increasingly difficult for small-business owners and employers to keep up with the influx of new rules and regulations, which in turn makes implementation and compliance an even greater challenge. A whopping 97% of the nation’s small businesses have fewer than 50 employees. Representative Kurt Schrader (D-OR) highlighted that something had to be done within the law to make compliance with PPACA more feasible for businesses with less than 100 employees. The devise tax was also brought up as an area of concern, mostly because there is a general misunderstanding of the tax and the full impact of it is still not fully known. Insurance premium cost differences between the young and the old and what that means for small businesses was a hot topic during the hearing too.