Stories From Small Businesses About Their Rising Health Insurance Costs: What’s Next?

Small businesses cheered when the U.S. House voted in March to repeal major parts of the Affordable Care Act, which many business owners say inflicted more aches and pains than it cured.

Health care was the top issue business owners wanted President Trump to address in recent surveys. Sixty percent favored a repeal of Obamacare, whose major provisions took effect in 2014.

Small business owners all over the U.S. describe soaring premiums, administrative burdens and shrinking healthcare options under the mandate that those with 50 or more full-time employees provide coverage.

Business owners who favor repeal of Obamacare don’t necessarily cheer for the House version, which Democrats have attacked and the Senate is expected to rewrite. The non-partisan Congressional Budget Office estimated this week that the bill would leave 23 million more Americans without insurance and others with costly medical conditions unable to afford coverage.

Obamacare-compliant health plans cost businesses at least 30 percent more by many accounts, and also bring huge annual premium increases of 25 percent to 40 percent in many areas. Small employers are forced into community-rated systems that increase costs for businesses with older workers.

Some firms have limited hiring to stay under 50 employees, and others have dropped health coverage, a move that can hurt companies as they compete for employees, and raised salaries to help reimburse workers who buy their own plans.

At a time when the economy seems to be improving, many businesses reported reducing their workforces, even when they needed to hire. High health care costs are stifling growth, and should concern many people when considering the overall long-term economic health of the U.S.

We wanted to share with you some stories coming out of some small business owners in Charlotte, North Carolina:

Government dictates

In 2013, at the cusp of the employer mandate, Henderson Properties was just below the 50-employee threshold and considering a hiring freeze to stay there. The real estate services company instead hired independent contractors and part-timers.

“Then after probably a year of struggling with that and not hiring people when we really needed to hire, I finally said the heck with it,” owner Phil Henderson said. “I can’t let the government dictate how I run my business.”

The company is now at 62 employees and still offers health insurance, as it has for 17 years. “What (Obamacare) did change was not only our bottom line but our employees’ take-home pay,” Henderson said.

Premiums that previously rose 5 to 6 percent a year have averaged 22 percent increases under Obamacare. To help absorb the increases, the company changed the share of health care costs it pays from 75 percent to 50 percent. It also moved to a higher-deductible plan to reduce workers’ contributions.

Henderson said he would continue to offer insurance if the mandate is repealed, but thinks his costs would go down if the government is less involved in health care markets.

“As a business owner and consumer, I would like to see market-driven approach just like other goods and services where I have choices and the consumer knows exactly how much it’s going to cost,” Henderson said. More transparency, he predicted, would drive costs down and improve competition.

Grow or die

Undaunted by the mandate, Wiki Wiki Carwash closed an acquisition in November and added a Greensboro store this year, going from three stores to seven and growing its workforce from under 30 to 65 people. “You’re either growing or you’re dying,” said president Anna Gacevich.

With the added healthcare costs, “it’s almost like we could take the seventh store, burn it to the ground and come out the same,” Gacevich said. “But we didn’t let it stop our growth, because I plan on growing more.”

Despite not knowing what health care will cost the company in the future, Gacevich said she’s at peace with the decision. As a libertarian-leaning Republican, she favors a single-payer healthcare system, which she thinks will cut waste and put the U.S. in step with other industrialized countries.

Admin headaches

Park Inc. has 300 employees, most of them part-timers. The parking management company offers healthcare coverage to salaried employees and, under Obamacare, to full-time hourly employees. With a predominantly college-age staff, only about 10 percent of those eligible took the benefits.

While dollar costs under the mandate have been less than president Brian Haupricht expected, the administrative costs of compliance have been expensive and vexing.

“We way underestimated how much time it was going to take us behind the scenes to manage all this,” he said. “One of the frustrations, even prior to Obamacare, is that it’s so complicated. And when you try to get answers even (insurers) don’t fully understand.”

At NARFA, we have always worked to keep our members ahead of the curve when it comes to plan designs, administrative support, compliance, strategy, and more. We offer more, when many are offering less. Since 1929 we have continued to advocate for our member businesses, and provided stability during all economic times.

We realize that small businesses are up against high costs, huge administrative burdens, and more. It is time for businesses to gain a true strategic partner, not just a broker.

Contact us today to learn more about how NARFA can help your business remain strong, continue to grow, and offer employees more.

Thanks to our friends at the Charlotte Observer for some content in this piece.