Small-business owners, workers in ACA danger
*This piece initially ran in the Knoxville News Sentinel.
One hundred sixty-four thousand. That’s the number of Tennesseans who will be affected if an impending mandate under the Patient Protection and Affordable Care Act goes into affect on Jan. 1, 2016. That puts a huge number of our state workforce in limbo.
Under this new regulation, the definition of “small group market” changes from businesses with up to 50 employees to those with up to 100 employees. Businesses that employ between 51 and 100 employees will then be subjected to new requirements that could mean a disruption in their health care coverage. As a result, according to a study by management consulting firm Oliver Wyman, this Obamacare expansion of the small group market will translate into an average 18 percent increase in insurance premiums for a majority of these employees.
Yet again, we’ll see people forced to change health insurance plans — and likely pay more money for less coverage.
If this change goes into effect, thousands of Tennessee small businesses will need to absorb the additional costs into their bottom lines. This is an unnecessary burden for the very backbone of our state’s economy that employs hard-working Tennesseans who provide for their families through meaningful employment and shared benefits.
What’s more, the definition of the size of a small or large group market has historically been defined by states themselves. In fact, nearly all states continue to define the small group market for businesses at one to 50 employees. This ensures that the law does not place an undue burden on businesses and, by extension, their employees. Striking this balance is consistent with our country’s tradition of federalism.
By allowing Tennessee to maintain its own definition of a small group market, businesses across our state will have the necessary certainty and flexibility for the future, including the ability to hire additional employees.
For example, Richards & Richards, a Tennessee-based records management company employing 55 full-time workers, will be directly harmed by this rule change. The two of us worked together to tell Richards & Richards’ story in a compelling video series last year — warning of what others should expect to grapple with as the tentacles of Obamacare continue to spread.
Small-business owners enjoy the ability to treat employees more like a family. In many cases, owners relish the opportunity to reward loyal staff by offering full benefits to employees. If the re-classification of small group market goes into effect, those valued employees at Richards & Richards could lose their high-quality benefits. Additionally, the company would be forced to reconsider any further business expansion, including hiring additional workers, until these new costs are absorbed. And this is just one of thousands of businesses that would be affected.
Some in Congress seem to understand the consequences and have introduced the Protecting Affordable Coverage for Employees Act, which seeks to allow states to maintain their current small group market definition. The PACE Act is meant to ensure that employees don’t face additional increased premiums or disruption in their insurance coverage.
We hope that other voices will take a stand for Tennesseans by calling for a rejection of this impending Obamacare mandate that would shift more power to Washington and away from the desks of small-business owners and the kitchen tables of hard-working families in our state.
Lindsay Boyd is director of policy at the Beacon Center of Tennessee. Steve Richards is the president and CEO of Richards & Richards.