Small Businesses Face Obamacare Sticker Shock

In an October 2009 speech to small business owners, President Obama promised his health care plan would “make the coverage that you’re currently providing more affordable.” Once again, the President’s rhetoric doesn’t match Obamacare’s stark reality.

Last Friday, February 21, the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary quietly released a new report confirming the Democrats’ health care law will increase health insurance premiums for two-thirds of the nation’s small businesses.

The Obama Administration’s own actuaries explained how the health care law forces small businesses to pay higher premiums. Obamacare limits the amount premiums can vary between young, healthy people and older, sicker people. The health care law restricted the age ratio to 3:1. This “community rating” means the premium charged to a healthy 21-year old is closer to the premiums charged to an older, sicker person – effectively taxing the young to pay for older enrollees.

Due to Obamacare’s community rating rules, the CMS actuary predicted 65 percent of small businesses will see premium increases, while 35 percent are likely to see rates decline. Whether a business’ health insurance premium increases or decreases depends, largely, on the company’s workforce demographics. Because the law makes young people pay more, small businesses comprised of younger employees will face rate increases while a business composed of older, sicker employees will see decreases.

Source: CMS actuary

Small businesses are expected to pass increased health insurance costs or savings along to their workers. The CMS actuary calculated that 11 million employees will pay higher premiums, while six million will see lower premiums. This is terrible news for America’s job creators. Earlier this month, the National Small Business Association released a survey that found 91 percent of small businesses reported premium increases during their last renewal. The average monthly insurance cost soared from $590 per employee in 2009 to $1,121 in 2014.

These increases happened despite claims by Democrats that small businesses would be protected from price increases. The Administration reportedly spent more than $1 million in taxpayer money to circulate 4.4 million postcards to eligible small businesses promoting the law’s tax credit. But the Government Accountability Office calculated that only 170,300 small businesses – four percent – actually claimed the credit, at a cost of $468 million.

It is obvious why the Administration tried to bury the CMS report. Democrats never said that the health care law would mean 65 percent of small businesses have to pay more so that 35 percent of small businesses could pay less. They promised their health care law would drive down health insurance premiums for everyone. America’s small business owners and their hard-working employees are finding out that Obamacare created more losers than winners.

Health Care Headlines

Washington Free Beacon: “VA Small Biz Facing 40 Percent Increase in Insurance Costs Due to Obamacare” Wistar Nelligan, owner and founder of Nelligan Insulation, enjoys providing health insurance for his 25 employees and says it’s a good plan with good benefits. He’s tried putting the premium hike off as long as possible, but the company’s insurance policy will expire in December. When its health insurance plan changes to follow new premium rating requirements under Obamacare, he expects insurance costs will skyrocket by 20 percent to 40 percent.

Forbes: “The Next Shoe To Drop: Obamacare Will Increase The Cost Of Employer-Sponsored Insurance” Yesterday, the Obama Administration’s Centers for Medicare and Medicaid Services released a six-page report predicting that Obamacare could cause premiums to increase for nearly two-thirds of small-to-medium-sized businesses. But CMS’ projections almost certainly understate the problem, one that will begin to affect millions of workers in the second half of 2014.

Washington Post: “Health law’s small business marketplace not attracting many small businesses ” Small-business owners, who were supposed to gain more choices and cheaper rates from the new online health insurance portals, have been slow to select plans through marketplaces since the rollout started last fall. In part, some say that is because luring employers to the marketplaces has taken a back seat to fixing technical problems and recruiting individuals and families. As a result, businesses in many states have been left with an online shopping portal that is only partially functional — if they have one at all.

Washington Examiner: “HHS official found White House ‘disarray’ months before health law rollout ” A senior Health and Human Services official was so frustrated last May over the White House’s “disarray” on health care before the launch of Obamacare insurance exchanges that he warned of needing a “come to Jesus meeting” with his counterparts. Internal emails reveal a close working relationship between Secretary Sebelius, HHS aides, Enroll America and White House staffers on fundraising efforts to promote Obamacare enrollment.

Politico: “Obamacare stats still hard to nail down” When you go to all this trouble to cover the uninsured, is it really that unreasonable to ask how many uninsured people Obamacare has covered so far? The answer, apparently, is: Yes. It’s unreasonable. The truth is, nobody has a good, real-time fix on how successful the Affordable Care Act has been in reducing the ranks of the uninsured.