The cost of health insurance is the most critical issue facing small business owners, and is the main reason owners do not offer employer-sponsored health insurance or discontinue providing the benefit, Holly Wade, director of Research and Policy Analysis at the National Federation of Independent Business (NFIB), said during a hearing before the Senate Finance Committee about the Patient Protection and Affordable Care Act (ACA).
She added that small businesses offering health insurance annually confront the arduous task of adjusting profit expectations, insurance plans, cost-sharing and other mechanisms to help absorb often erratic changes in total premium costs.
Wade noted that the NFIB Research Foundation recently published the second of a three-part health insurance longitudinal survey titled, “Small Business’s Introduction to the Affordable Care Act Part II,” which found that the ACA exacerbates market turmoil evidenced by large numbers of policy cancellations, shifting renewal dates to obtain better rates, changes in employer cost-sharing, and adoption of different, though not necessarily more desirable, health insurance plans.
Small business owners have also encountered repeated delays and confusion over major components of the law including the Small Business Health Options Program (SHOP) exchange marketplaces, the small business health insurance tax credit, the employer mandate and financial reimbursement options, according to Wade.
Currently, only a few states have fully operational SHOP exchange marketplaces and for those states that do, they are finding little interest among small employers or their insurance agents. Wade said the NFIB survey found just 13% of small employers visited the HealthCare.gov website to look for individual insurance, 4% for business insurance and 8% for both.
Wade noted that the law prohibits employers from reimbursing or otherwise providing financial support to employees in order to help them pay for individually purchased insurance plans. However, the NFIB survey found that about 18% of small employers offered this benefit last year, and they are now in violation of the law.
“The ACA’s potential benefits for small employers have not materialized five years into enactment. Instead, the small employer experience more often consists of increased levels of uncertainty and frustration related to changes in the small group health insurance market and rules associated with the employer mandate,” Wade concluded.
More testimony from the hearing can be found here.