Millions of Americans are losing their existing health insurance plans, losing access to their preferred doctors, and paying more for their health insurance thanks the Affordable Care Act. Even for those Americans who have signed up for coverage now that Healthcare.gov is limping along, it’s unclear that there information has made it to insurers, and whether they are actually enrolled in coverage.
These problems, which have dominated headlines for two months, are a mere prelude to problems that will emerge if the law remains unchanged. The law’s most pernicious effects are set to begin in 2015, when employers will be forced offer health insurance to full-time employees, or pay substantial fines.
Affordable Care Act needs to be modified
Republicans struggled for two years to repeal the law, but it’s clear that President Obama will repeal any attempt to completely eliminate the law, and unless Republicans achieve massive victories in the 2014 midterms, it’s unlikely that Congress would override an Obama veto.
With that reality accepted, lawmakers should focus on minimizing the pain the law will cause the American people. The president already took one step himself: delaying implementation of the employer mandate when it became clear that rules governing compliance were confusing business owners and threatening the economy. The mandate was originally set to take effect Jan. 1, but will now be delayed until 2015. The mandate forces business owners with more than 50 full-time employees to provide health insurance, or pay a fine. The mandate should be repealed entirely because of the financial disincentive it creates for hiring and growing a business, but I doubt that will happen. Instead, at the very least, lawmakers should focus on the most deleterious provision of the employer mandate: the rule defining full-time as 30 hours a week or more, rather than the traditional 40-hour workweek.
This impact of this future rule is already causing some employers to not only limit the number of full-time employees hired, but also cut current employees’ hours to avoid the 30-hour threshold. And it’s not just businesses that are being forced to slash the hours of employees in order to avoid unbearable costs — local governments are doing the same, according to the Washington Post, which cites Middletown Township, N.J.; Bee County, Tex.; and Brevard County, Fla.; as examples of hours cut because of the Affordable Care Act.
As a longtime franchise chairman who oversaw the rapid growth of Mail Boxes Etc. (now The UPS Store), as well as I Can’t Believe It’s Yogurt and Tasti D-Lite, and as current chairman of Proctor & Gamble’s Agile Pursuits Franchising Inc., I have had the pleasure of helping thousands of people become small businesses owners, grow their businesses and create new jobs in their communities. To grow, businesses must be well-run and profitable — and in order to stay profitable, businesses must control labor expenses to keep them in line with revenue. This is all common sense to any business owner, but it’s a point that’s not understood by people who think businesses are being selfish when they talk about cutting hours so that employees will still be considered part-time under the healthcare law. Businesses must control their costs in order to survive. The problem with the way the healthcare law defines full-time status is that it forces employers to cut employee hours in order to avoid a huge price trigger — and that hurts employees who will now have lower wages or be forced to find additional part-time work.
Small businesses may expand their part-time workforce in response to the law — but I don’t think part-time work is the goal for most Americans, for Democrats, or for the president. The livelihood of small business owners, as well as our ability to provide good jobs for employees, is directly linked to the health of the economy. According to the Small Business Administration, small businesses create 64 percent of net new private-sector jobs in America. If the Affordable Care Act isn’t reformed in some commonsense ways, the health care law will impose burdensome and costly mandates on small businesses, slowing down America’s job engine.
Thankfully, there is still time for lawmakers to advance smart, pragmatic bills to relieve small businesses from these overly burdensome regulations, like the redefinition of a full-time employee from 40 hours a week to 30 hours a week in the ACA. Franchise owners, along with the International Franchise Association, of which I am a member, have been consistent advocates for such logical reforms since the law’s passage.
Ultimately, successful small businesses need tailwinds, not headwinds. Growing small businesses should not be rewarded with ever-rising regulatory burdens. We need relief, and we need it now.