Businesses Fear Affordable Care Act Costs

Jan 18, 2013

Businesses are starting to see a bit of sticker shock, as they renew health insurance policies for their workers. Premiums are going up and some say it’s partly due to the federal healthcare law already in effect. Things like free birth control and no fees for primary care aren’t cheap. And Blue Cross Blue Shield of Florida insurance executive John Urbanek says those things still have to be paid for:

“It’s a broader set of things to cover. So of course, they sound good this way. But we have to understand that they will add to the cost of these. So from a benefit standpoint, smaller employers, most will have to offer a lot richer benefit than they offer today.”

Urbanek was part of a group of business representatives before Florida House and Senate Committees looking at the impact of the Affordable Care Act. Under the law, employers with between 50 and 200 full-time workers must offer health insurance to those employees or pay fines. Employers with more than 200 workers must automatically enroll their employees in insurance plans. Justin Kindy, Vice President of the Human Resources Consulting firm, Aon Hewitt, says he doesn’t believe larger employers will see much of a difference in what they do now.

“Depending on Medicaid situation, the Exchange situation in that state...I hesitate to say there’s a universal answer that applies to everyone. But I think for the majority of employers, its going to be pretty close to status quo to where they’re at currently," he said.

But while larger business may not see drastic changes, small businesses say they still have lots of concerns about what will happen to them under the healthcare law.

“And I’ve got to tell you I am thoroughly confused. and I have no idea what it’s going to cost me," said Ken Williams, President of the  Marpan Supply Company, a recycling business in Tallahassee.

Williams has 74 employees and about half of them get their insurance through company-sponsored plans. He’s got a choice: continue to offer that insurance, or pay a fine. But what if Williams and the Marpan Supply Company had fewer than 50 full-time employees?  Under the federal healthcare law, businesses with fewer than 50 full-time workers are exempt from the law’s penalties. They don’t have to offer insurance to their workers.

“You’re other employers, you can still have part-time employees that could still not be required to provide benefits for....and that could be a place where they turn to help afford the new burdens that our federal government is putting on small businesses," said Republican Senator Aaron Bean.

Lawmakers say they’re worried some businesses will drop coverage and choose to pay the fines if those fines are cheaper than the cost of insuring workers. But the federal government did write in some incentive deals for business to get them to keep coverage.  A big one is health insurance tax credits, where employers can get money back for offering plans. Many businesses have already taken advantage of the credits, but some say the tax breaks may not be enough to offset the additional costs.

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