NFIB study: Healthcare costs up; blame ACA (Update)

By Miles Moore, Senior Washington Reporter

WASHINGTON (Nov. 1, 2013) — Health insurance costs continue to rise for small business owners in the wake of the Affordable Care Act (ACA), according to a new study from the National Federation of Independent Business (NFIB).

Health insurance premiums continue to rise, despite repeated assurances by the Obama administration that the ACA would lower premiums, the NFIB claims.

On average, the price of healthcare insurance premiums for small businesses rose 12 percent between 2012 and 2013, said William Dennis, NFIB Research Foundation senior fellow and author of the study.

Of 921 small business owners interviewed for the study, 64 percent reported paying more for employee insurance premiums this year than last, he said.

"There has been very weak activity in small business growth for a considerable period, and healthcare costs are a major reason for that," Mr. Dennis said in an Oct. 31 teleconference on the study.

The full 58-page study is available for download on the NFIB's website.

When health insurance premiums increase, the most frequent impact on small businesses is lower profits, Mr. Dennis said. Higher prices, increasing employees' share of costs and freezing or reducing wages also result from higher insurance premiums, he said.

The Obama administration has been poor in disseminating information about the ACA and its provisions to small business, according to the survey. Only 4 percent of business owners said their main source of information about the ACA was the government. Forty-two percent said the news media were their chief information source on the ACA, followed by the insurance industry (15 percent), trade associations (11 percent), business advisers (10 percent) and the healthcare industry (8 percent).

Most small business owners don't know that as many as 150,000 small businesses may be subject to the ACA's "aggregation rules," according to Mr. Dennis. Under those rules, if a small business owner owns more than one business, the government can aggregate the total number of employees of those businesses to reach the 50-employee threshold requiring employers to either provide healthcare or pay a fine.

Sixty-nine percent of small employers said they were "very" or "somewhat" confident that they will be compliant with the ACA, but the July 2 announcement postponing the employer mandate diminished rather than enhanced their confidence, according to the study.

This is the first of three annual studies the NFIB plans to conduct on small business reactions to the ACA, the association said.

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To reach this reporter: [email protected]; 202-662-7211.

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