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Small business may feel bite of Obamacare

By   /   June 29, 2012  /   3 Comments

By Ryan Ekvall and M.D. Kittle | Wisconsin Reporter

MADISON – Call it an unintended consequence of the health care act. Whatever you call it, Boyd Miller is living it – and the nation’s sluggish economy could feel the effects.

Miller, president and owner of Wisconsin Thermoset Molding, said the Milwaukee-based contract molding component manufacturer is bouncing back from some pretty tough times.

When he took over the 70-year-old operation in 2008, WTM boasted a workforce of 45 employees, Miller said. In the worst of the recession, the plant’s payroll dropped to 11 workers.

Business finally climbed back to fourth-quarter 2008 levels in the first part of this year, and the factory employs 35.

But Miller says he’s hesitant to hire additional workers, due to a provision in the Patient Protection and Affordable Care Act, narrowly upheld by the U.S. Supreme Court this week.

“I will do my best to stay below 50 people, as I think many business owners in my realm will do,” Miller told Wisconsin Reporter Friday afternoon, hours after he joined Lt. Gov. Rebecca Kleefisch at a news conference on the impacts of the Affordable Care Act — or Obamacare, as Miller and his fellow conservatives derisively call it.

The law mandates that companies with 50 full-time equivalent employees must provide health insurance or pay a penalty of $2,000 per full-time employee in excess of 30 full-time employees.

Miller’s story is common among small businesses. He said his health insurance rates soared, and the company passed along the costs to employees. Six of the workers, who make on average about $12 an hour, Miller said, couldn’t afford the increases, and they dropped out of coverage. The provider dropped Thermoset Molding. The company picked up another insurer, for a about year. Miller worries rates will rise again, and the cycle will repeat itself.

“We will end up sometime in future on federally funded health care,” he said. “I understand, and I believe most Americans can figure this out, that if you keep the same supply and increase demand, the cost will go up or services will go down. Why the president and Congress can’t grasp that is beyond me.”

Miller’s problem could be the American economy’s problem. If small businesses hesitate to expand, that could have a deleterious effect on a U.S. economy and its unemployment rate north of 8 percent.

Same story with Wisconsin and Gov. Scott Walker’s ambitious pledge that the state will create 250,000 jobs during his first term in office. The governor is nearly half the way home, and a long way from the quarter-million mark.

One Kenosha business co-owner told Wisconsin Reporter the manufacturer would rely on temporary workers to meet increased orders to avoid the health care act insurance threshold.

“Our members are very worried about costs going up. Premiums have increased with the (law) being in place, we expect that to continue until reform for healthcare starts focusing on costs of health care and not just access to health care,” said Rebecca Hogan, director of health and human resources policy at Wisconsin Manufacturers and Commerce. The state’s largest industry advocate has opposed the health care act since its proposal.

“I think from a small business perspective, smaller businesses have fewer options available to them for health care costs. It’s going to make health insurance even more expensive,” said Bill Smith, Wisconsin state director, National Federation of Independent Businesses, lead plaintiffs in the case against the health care act.

He said the law’s health care exchanges may offer some hope for controlling health care costs, but doubted government’s ability to run them efficiently.

“Look, there are more than 20 different new taxes included in this package,” Smith said. “There’s additional bureaucracy and regulation. It’s not just providing health insurance, but providing health insurance that meets the benefit standards of federal government. We have to participate based on what federal government tells us to do. It’s taking away a lot of consumer choice and infringing on the rights of small businesses.”

Hogan said employers also will have to consider additional costs, such as hiring an accountant or attorney to make sure they’re in compliance with the law.

But another provision in the law provides small businesses health care tax credits, allowing companies with less than 25 full-time employees that cover at least 50 percent of total premiums to qualify for a tax credit of up to 35 percent of their premium contributions. The credit rises to 50 percent in 2014, when the biggest portions of the act take effect.

That’s conceivably a big savings for companies that use health insurance as a key recruiting tool.

Small-business owner James Stoffer was ecstatic about the high court’s decision.

“I jumped up and down and hollered and acted like I was 10 years old,” he told NPR.

Stoffer, owner of Delafield-based Wholly Cow Frozen Custard, a seasonal restaurant, told NPR his main concern is paying for health care for himself and his wife. He said he believes the law will keep his premiums down in the long term and allow him to devote more of his personal resources to his business.

“I might even grow it to the point where we have more than one business and where we might take it to year-round status,” he told NPR.

But many small businesses say they need another mandate like they need higher input costs, and the health care act comes with an estimated $105 billion in mandatory spending, according to an analysis by U.S. Rep. Steve King, R-Iowa, based on Congressional Research Service estimates.

The problem, one Wisconsin insurance expert asserts, is that Wisconsin already provides some of the most affordable and accessible coverage in America. Regardless of the Supreme Court’s decision, nearly everyone in Wisconsin has access to health care, mainly through Wisconsin’s BadgerCare, a generous system of benefits for low-income residents by most accounts.

J.P. Wieske, legislative liaison for the state Office of the Commissioner of Insurance, said a lot of the popular consumer protections – dependent coverage to age 26, the high risk pool for preexisting conditions – are in Wisconsin law. The only thing really missing, the individual mandate.

Wieske said Wisconsin also has what he fears the federal system won’t – a strong marketplace driven by competition.

“I’m a little nervous over the long haul what happens to Wisconsin’s uniquely competitive marketplace,” he said. “We’re going to see consumer choices start to fall away. It’s going to be much more difficult for local players to continue to play in the marketplace.”

Steve Baas, vice president for government affairs at Metropolitan Milwaukee Association of Commerce, said the biggest threat to business long term is the overall cost of the entitlement, estimated at about $1 trillion over the decade.

“Somebody’s going to have to pay for it,” Baas said. “Government prints the money, but government doesn’t make the money. They’re not going to pay for it with magic beans.

“When the government runs up the bill, businesses are usually the ones who pay for it.”

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  • Mary

    My feeling is the USA officially became socialized this past Thursday as a result of the SCOTUS ruling.

    NOTHING in life is free folks. We are ALL going to be paying through the nose for this monstrosity of a law.

    Next time you see someone heavily smoking, drinking and eating “crap”, remember you will be paying for that person’s healthcare because they are ignorant. Hang on to your wallets because this one is going to hurt BIG TIME.

    Hopefully there is still a chance Obamacaare can be repealed……. afterall it was presented to the American people through lies and deception. We were told it was NOT a tax but it IS a tax. I demand a re vote by Congress!!!

  • brokerwritergrl

    Well Mary, I hope you don’t have to eat your words considering everywhere else even tourists have basic care. As a woman, you above anyone else should understand the importance of this bill. Have you had your basic tests recently? Well, some can’t afford to get their cancer screenings and pap smears. By the way, medications rise at an alarming rate anyhow. What if you lose your job before your wish comes true. Be careful what you wish for, dear.

  • Arepublican

    brokerwritergrl,

    You have only seen the “good” parts of this law and that’s exactly what Obama wanted.

    You know you have been paying into it, along with 750 billion stolen from Medicare, for the last three years (approx) and it doesn’t go into full effect till 2014!

    This law does nothing for tort reform – which is where the majority of increased costs come from.

    And this law brings all of us more big brother – to tell you what you can eat, drink, smoke, exercise and a host of other items to control your life.

    This law is not what the founding people of this land had in mind – nor should we.