Small business owners say they do not expect much to change with the Supreme Court decision upholding President Obama's health care reform. With a few exceptions - such as penalties for non-compliance - businesses say they are already conforming to the law because of Massachusetts's mandates.
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AP Photo/NFIB, William B. PlowmanAn Aug. 3, 2011, file photo shows Dan Danner, President and CEO, National Federation of Independent Business, talking at a press conference in Washington. Danner said Thursday, June 28, 2012, that the NIFB will continue to push for repeal of the Affordable Care Act, but odds of completely overturning the health care law seem slimmer now.Latest Politics Coverage
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Dave Ratner, owner of Dave's Soda and Pet City in Agawam, wasn’t holding his breath waiting on the Supreme Court’s decision to uphold President Obama’s health care reform.
“I don’t think it makes that much difference for someone in Massachusetts because we’re already living with it,” Ratner said. “The only thing is we can look at friends in other states and go nah nah nah nah.”
The impact of the Affordable Care Act on small businesses has been a central argument for many opponents of Obama’s health care overhaul. The National Federation of Independent Business was the lead plaintiff in the Supreme Court case challenging the law. In a recent radio ad, Massachusetts Republican U.S. Sen. Scott Brown cited the impact on business as one reason he opposes the law. "I talked to many employers, especially small business owners, and they tell me they’re afraid to hire more people because of the law,” Brown says in the ad.
Opponents point to the penalty employers face if they do not contribute toward their employees’ health care and to a “health insurance tax” on insurance companies that could result in higher premiums. The White House has responded by pointing to a tax credit given to small businesses to help them pay insurance premiums; to health insurance exchanges that will let small businesses pool their buying power; and to rules prohibiting insurers from charging businesses more if they employ sicker workers.
But in Massachusetts, small businesses and advocates say that, with a few exceptions, they believe Obama’s reform will have little impact. After all, many of the reforms Obama is implementing nationally already exist in Massachusetts, due to the 2006 health care overhaul by Republican presidential candidate and former Massachusetts Governor Mitt Romney.
“Massachusetts employers are not going to see much change from what they’re already doing,” said Richard Lord, president and CEO of Associated Industries of Massachusetts, a trade association of Massachusetts businesses.
Many of the central features of the Massachusetts and national plans are similar – mandates that individuals have health insurance and employers provide it, health exchanges where people can buy insurance in a competitive marketplace, a requirement that insurers offer a plan to everyone regardless of preexisting conditions, and some expansion of eligibility for public health plans and public subsidies.
“We’ve been living with the health care reforms of 2006 here in Massachusetts, which was really the basis for the national model,” said Jeffrey Ciuffreda, president of the Affiliated Chambers of Commerce of Greater Springfield. “I think most businesses have adjusted or found ways in which to come into compliance with Massachusetts law. I don’t think this ruling is going to change any of those actions.”
Paying the Penalty
Here is a look at the number of Massachusetts employers who were required to pay a penalty in 2010 for not meeting state standards for providing health insurance to employees.
Employer size*
11-26
26-50
50+
| Total MA employers**
10,020
4,640
7,664
| Employers required
to pay penalty ***
491
181
345
|
*measured in full-time equivalent employees
**Total refers to 22,324 employers subject to Fair Share Contribution policy, out of 188,000 MA employers overall
*** Referred to as a "fair share contribution"
Source: Massachusetts Division of Health Care Finance and Policy
Lord said the biggest change for small businesses is in the penalties paid by employers who do not contribute toward their employees’ health insurance. In Massachusetts, employers of 11 or more full-time employees who do not provide health insurance must pay a penalty of up to $295 per employee per year. Under federal law, the penalty only kicks in for employers of 50 or more, but it is $2,000 per employee per year. According to the state Division of Health Care Finance and Policy, in 2010, there were 345 companies in Massachusetts with more than 50 employees who had to pay the penalty. (A total of 1,017 companies paid the penalty, out of 188,000 total employers in Massachusetts.) The state legislature will have to decide how to reconcile the laws.
One subset of Massachusetts businesses that will see a significant change under Obama’s overhaul is the medical device industry. The Affordable Care Act levies a 2.3 percent tax on revenues earned by medical device companies, effective Jan. 1, 2013. Massachusetts has the second largest cluster of medical device manufacturers in the U.S., and the industry directly employs 24,000 people, according to MassMEDIC, a medical device industry association.
Tom Sommer, president of MassMEDIC, said the tax could hurt these companies’ growth and raise the cost of health care as companies pass the tax on to hospitals and doctors. “The medical device industry is supportive of the goals of health care reform legislation,” Sommer said. “We’re concerned we’re being unfairly penalized as a result of its passage.”
Overall, local business owners have mixed assessments of the law. Ratner, who has more than 100 employees in six locations, says he worries that the Massachusetts and federal laws both ignored cost containment. “While it’s wonderful that everyone’s getting health insurance, what they forgot about is cost,” Ratner said.
Ratner said he is reluctant to hire new employees because of the high costs of health insurance. “The more the government gets involved, the less there’s an incentive to control costs,” Ratner said. “The only way you control costs is to leave it up to the market.”
According to a 2012 report from Massachusetts’ Division of Health Care Finance and Policy, Massachusetts was the state with the ninth-highest premiums for a family plan in 2010. The Kaiser Family Foundation in 2012 wrote that Massachusetts has the highest individual market premiums in the country.
In 2010, Gov. Deval Patrick gave the Department of Insurance authority to disapprove of some insurance rate increases that were above a certain threshold, and since then the rate of premium increases has dropped dramatically, according to the state Office of Health and Human Services. The state legislature is currently working on a comprehensive payment reform bill, which will address health care costs by overhauling the way in which doctors and hospitals are paid.
Patrick Pezzati, owner Turn It Up!, an Easthampton-based chain of four CD stores, said the Romney reforms benefitted his part-time employees who are ineligible for the company plan and can now get health insurance through the state. But he found that the plans set up for small businesses were more expensive than plans on the open market. “There’s not much reason to believe under Obamacare it will be much different,” Pezzati said. Pezzati said he would like to see an insurance plan that allows full-time and part-time employees to buy in at different rates – but neither the state nor federal law will help him.
Jack Finn, owner of A2Z Science and Learning Store in Northampton, which has 17 employees, said he supports Obama’s plan because he believes getting more people covered by insurance will lower premiums. “Anything that would propel this country toward more universal health care should be welcomed by all small businesses,” Finn said.
Jean Deliso, who runs a financial services business with two employees, is more pessimistic. Deliso has heard she will be able to take advantage of the federal reform by pooling with other businesses to buy insurance through an exchange at lower rates. “Whether I believe that or not is yet to be seen,” Deliso said. “The devil’s in the details. Once you get into a program like this, it could often be more difficult than it seems on the surface.”
Deliso said Obama’s overhaul will be a disincentive for small businesses. Deliso said employers recognize that offering health insurance is the right thing to do; the problem is cost. The penalty on larger employers who do not offer insurance, she said, “is a way of knocking people, to not want them to be in business for themselves.”
Tricia Canavan, president of United Personnel, a staffing agency with offices in Springfield and Easthampton, said she doesn’t anticipate major changes in the way the company handles health care for its employees. “I don’t foresee a huge difference because we’ve been following the state mandate,” Canavan said. “There’s not a huge difference between what’s required in Massachusetts and what the federal government will require.”
Looking ahead, advocates for small businesses say their focus will be on fixing problems with the state law and on cost containment. Ciuffreda said chambers of commerce recently started forming health care cooperatives, allowing small businesses to get more leverage when buying insurance.
Jon Hurst, president of the Retailers Association of Massachusetts, said the state is only now addressing cost containment and accountability. “Hopefully down in Washington they’ll learn that lesson quickly and do it much sooner than the six years we waited for those reforms,” Hurst said.
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