Healthcare is now the most significant national concern among small businesses, outpacing the federal budget deficit and taxes.
The findings were revealed this week in the fifth annual U.S. Bank Small Business Survey. With the rollout of the Affordable Care Act, the study found business owners are wary of its long-term impact.
In the study’s words: “Slightly more than six in 10 owners now say the long-term impact of the Affordable Care Act will be negative on their business.”
“Small business owners want to provide health insurance as a benefit for their employees and for themselves,” said Bill Hammond, president of the Texas Association of Business. “The challenge is to figure out how to afford it; it’s getting more and more expensive.”
At least three out of five owners who run a business that makes at least $1 million annually say the law resulted in higher premiums for their business, the study found. For larger businesses, the strategy may be to shift that cost burden onto the employee. But for smaller operations, they’re not investing in their own companies the way they would otherwise.
Forty-five percent of business owners with at least five employees reported decreasing the forecasted amount of new hires. A third of those surveyed turned to cutting staff to stay afloat. The smaller the business, the study found, the more likely they put off or canceled moves that would expand their offerings.
Employers with of 50 or more on their payroll will eventually be forced to provide insurance for their workers. In February, the Obama administration extended the deadline for companies of between 50 and 100 employees until 2016. Business owners who fail to provide insurance would be fined $2,000 and $3,000 per worker.
“Not only do you have the 50 limit, you have the additional costs and uncertainty of where this thing is headed,” Hammond said. “They are doing everything they can to hold off on hiring additional employees.”
Part of that uncertainty is whether Texas will join the 26 other states that have already expanded Medicaid. Business groups are split on that. While Hammond remains against Obamacare—or, as he put it, “the biggest hindrance to hiring in the history of man”—the group has come out in support of expanding Medicaid. By sitting on that decision, a study issued last year found the state will lose an estimated $9.58 billion in federal funding by 2022.
That uncertainty, combined with the law’s recent implementation, is what helped push healthcare into the top spot for concern among small businesses. However, hope remains: Fewer business owners are anticipating a recession than last year and 70 percent reported the financial health of their business as good, very good, or excellent, up from 67 percent in 2013.
The survey was conducted by an online sample of 3,173 small business owners who make less than $10 million annually.