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Peel Back the Onion

January 19, 2015

By: Stephen Waguespack

Unless Congress acts, this will be the year the threats of Obamacare become reality for American employers. This is especially true for small business.

Five years after becoming law, the Affordable Care Act continues to confound and confuse by defying common sense. Navigating its complex rules and regulations is like peeling an onion, stinging the eyes of business owners as every burdensome layer is revealed.

A timely example of one of Obamacare's stinging layers is the law's definition of the workweek. Under the law, businesses employing at least 50 full-time workers are mandated to offer health insurance to anyone working “full-time,” which it defines as 30 hours a week, or pay stiff fines.

The Congressional Budget Office estimates that over the next decade, this provision alone will assess an additional $46 billion in penalties on employers.

As a result, employers are restructuring their workforce to make up for costs, cutting their part-time workers' hours so they stay below the 30-hour threshold; hurting individuals that need the hours to support their families, and sending exactly the wrong signal to an economy trying to recover from the national recession.

If the administration continues to incentivize small businesses to slow or halt their plans for growth and expansion, America will soon become a nation of part-time workers with multiple jobs.

Prior to Obamacare, over 178 million Americans, more than half of the population, received voluntary employer-based health insurance. The new definition of full-time employment has slashed that number to two-thirds and will only continue to do so as long as this mandate stays in place.

LABI recently signed on to a letter to Congress, along with many other business groups across the country, supporting the House legislation to redefine the workweek to 40 hours rather than 30. Last week the House of Representatives passed the “Save American Workers Act,” a bill that would waive the fees and penalties associated with this provision. Hopefully, the Senate will take this up in short order and send it to the president's desk.

In addition, there is an effort in Congress to repeal the Health Insurance Tax (HIT). Instead of reducing the cost of health insurance premiums for small business, this provision will greatly increase it. According to the Congressional Budget Office, this tax “would be largely passed through to consumers in the form of higher premiums for private coverage.” Estimates show this tax will amount to $145 billion in assessments between 2014 and 2024 alone.

These types of costs are lurking right around the corner and will restrict growth and investment by small businesses. Collectively, they are part of the many reasons that the vast majority (84 percent) of small business owners indicate the U.S. economy is on the wrong track.

Congressman Charles Boustany has introduced “The Jobs and Premium Protection Act,” which will repeal the annual fee on health insurance providers and “The Small Business and Family Relief Act,” which will provide immediate relief from the HIT for two years while a permanent solution is developed. Hopefully, they will be taken up soon.

These Band-Aids can help stop the bleeding of jobs and investment we are seeing as a result of the fees and penalties associated with Obamacare. They are a good first start, but are only a first step to bring sanity back to our health marketplace.

This is the year where we choose a path as a country. Will we go the way of socialized health care or will we return to a more market-based approach to health coverage? We can have a system that helps our people get quality coverage and empowers our employers to invest and grow their business and employee base. We don't have to sacrifice one for the other.

It is time to undertake the eye-watering effort needed to peel back this onion layer by layer and right this wrong. If not, make no mistake, this onion will be enough to drive our small businesses to tears in 2015.