NCPA - National Center for Policy Analysis

Health Reform One Year Later: Small Business Owners Expect Costs to Rise

July 27, 2011

One year after the passage of sweeping health insurance reform legislation, the lasting impact of the Patient Protection and Affordable Care Act (PPACA) on the small business community remains to be seen.  A new study by the National Federation of Independent Businesses (NFIB) Research Foundation indicates that the overwhelming majority of small business owners do not expect the law to reduce cost or regulatory burdens, and nearly two-thirds agree that the law will result in premium increases but not in better care.

Other highlights of the study include:

  • Twenty percent of small employers (businesses employing 50 or fewer people) currently offering health benefits expect to significantly change their benefit package and/or their employees' premium cost-share the next time they renew their health insurance plans.
  • Since enactment, one in eight (12 percent) small employers have either had their health insurance plans terminated or been told that their plan would not be available in the future.
  • By overwhelming margins, small employers who have some knowledge of the new law think that PPACA will not reduce the rate of health care (insurance) cost increases, will not reduce the administrative burden, will increase taxes and will add to the federal deficit.  They agree that PPACA will result in more people having health insurance coverage, but do not think it will yield a healthier American public.
  • Low-wage employees have a powerful incentive to bolt an employer's health plan for the newly established and heavily subsidized exchanges.  Should employees begin to leave for an exchange, 26 percent of currently offering small employers are very likely to explore dropping their health insurance plans and another 31 percent are somewhat likely to do so.

Source: "PPACA One Year Later: Small Business Owners Expect Costs to Rise," National Federation of Independent Businesses, July 25, 2011.

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