• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • House Subcommittee: Obamacare Will Burden Small Businesses

    The House Energy and Commerce Subcommittee on Health recently held a hearing to review how Obamacare regulations will affect employers’ ability to maintain health coverage.

    To illustrate the magnitude of the new regulatory burdens on businesses, subcommittee chairman Joe Pitts (R–PA) displayed a stack of over 3,500 pages of Obamacare rules, notices, and regulatory guidance issued so far by the Administration. This additional burden, the hearing highlighted, will harm employers’ ability to offer health coverage and disrupt coverage for Americans across the country.

    Among the new regulations are “minimum loss ratio” (MLR) requirements, which force health insurers to spend at least 80 percent of premium revenues on medical claims costs or “activities that improve health care quality.” The MLR requirements are likely to force some insurers out of the market, leaving businesses with fewer coverage options.

    Additionally, the MLR regulations could place severe limits on the use of consumer-driven, high-deductible plans combined with health savings accounts (HSAs), an increasingly popular option in recent years. Since HSA plans have a high deductible and lower premium, their “loss ratios” tend to be much lower than the new rule allows. As Representative Michael Burgess (R–TX) pointed out during the hearing, HSAs put consumers in charge of more of their health care decisions, helping to keep costs down.

    Other Obamacare regulations, such as new benefit mandates, will increase premiums, which will impose additional costs on insurance providers and employers. Added benefit and administrative costs could become too much for employers, forcing them to drop coverage for their workers.

    While liberals have touted the new law’s small business tax credit as a way to help employers provide coverage and offset new costs, a poll of 304 small businesses performed by the Small Business and Entrepreneurship Council showed that only 7 percent of firms have used the available credit. Of those that did not, 27 percent said it was because they weren’t eligible, 21 percent said the credit was too small or offered no benefit, 3 percent said it was too complex, and 20 percent weren’t aware that it existed.

    Karen Kerrigan, president of the Small Business and Entrepreneurship Council, said that the credit’s temporary nature makes it “no use to many entrepreneurs who need to know it will be available over the long term in order to have practical utility.”

    Layering more bureaucracy on top of an overly complex system will not cut costs or improve health care quality. Instead, interfering regulations will only disrupt the insurance market by limiting choices for employers and patients and increasing costs. Repealing Obamacare and replacing it with real patient-centered, free-market reforms is the only way to create and maintain affordable health coverage.

    Posted in Obamacare [slideshow_deploy]

    7 Responses to House Subcommittee: Obamacare Will Burden Small Businesses

    1. Bobbie says:

      It's got to stop NOW! It's unconstitutional and hovering daily! PLEASE get it off our backs! In America our lives aren't suppose to turn into political games but every morning we wake up to find out what else were being hit by government overreach!!!!!!

      • Donna says:

        As long as the Conservatives want control of our lives, there will always be political games. Their idea of smaller government is de regulating everything from banks, Wall Street and anything that might impead their ability to acquire more wealth from the poor and middle class. This Margo Crouch is a paid lobbyist for Heritage Foundation a non profit organization dedicated to the perpetuation of Conservative leadership. i.e. more Bernie Madeoff's, More million dollar bonuses to Stock Brokers,.

    2. carlos says:

      why not include in the discussion bushcare, the inclusion of pharma drugs without tax increase or cost controls? The spending, unfunded is in the trillions…..

    3. Bobbie says:

      Excellent point, Carlos! What is going on with the pharma besides the fact they're being dumped down ours and the throats of the elderly at a cost? A pill to mask every pain and problem and then a pill for each reaction you may have to each of the pills prescribed (with a variety of manufacturers for each.) Slowly destroying natural immunities and natural abilities to heal on one's own. Lots of freedom for government control to abuse without limit in this area!. Free time for the control of government to call crisis at any time that best suits them. We need accountability and practicality that can be trusted, that's found in the private sector. We need the private sector!

    4. Donna says:

      This article is dated July 1, 2011, but the hearing was not scheduled until July 2nd. Any spin doctor can make something out of nothing. What is wrong with asking Insurance companies to spend 80% of premiums on paying health care claims. That would reduce the big bonuses paid out to executives that is why Insurance executives might whine. Big Pharma does NOT was price controls on drugs.

      • Bob says:

        Since the new regs require 80% of premiums to go for claims does this apply to government programs as well? Is only 20% of what the Social Security Administration receives spent on salaries, office expense and other administrative costs? They should be able to do all this with a smaller % because they don't pay property taxes on their facilities or pay fed/state/local taxes.

    5. CraigJCasey says:

      Obamacare has already cost over 2 million jobs. Some estimates as high as 4,000,000. That is lost revenue to the government, and many file for unemployment costing the government. Only the parallel universe of government bureaucrats, could they turn job creation into an expenditure for never-ending unemployment benefits.

      Have you noticed that the politicians that's claimed Obamacare would save us money, have abandoned that argument, now that the real numbers are starting to come out? And if less people are working, that's less money they can buy small business products with. http://cobrahealth.com/Obamacare.html

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.