Is Obamacare Hurting Hiring By Small Businesses?

The Affordable Care Act, which has become known as Obamacare, will require small businesses with 50 or more employees to offer health care coverage to their workers. Some have suggested that could be discouraging hiring by small businesses.

Copyright © 2013 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

LINDA WERTHEIMER, HOST:

The May jobs report comes out tomorrow, and surveys suggest it may be disappointing. For today's Business Bottom Line, NPR's John Ydstie reports on whether the Affordable Care Act - or Obamacare - might be influencing hiring decisions for small businesses.

JOHN YDSTIE, BYLINE: Small companies face the most direct effects of the Affordable Care Act. Those with 50 or more full-time-equivalent employees will be required to offer health insurance for their workers, or face a financial penalty beginning January 1st. That's got Jess Whitsitt's attention. She and a partner founded a sweet and savory pie business in Seattle about two-and-a-half years ago. They've now got two storefronts, one next to the space needle, and 28 employees.

JESS WHITSITT: We're actually getting ready to launch a food truck, a pie truck. So we're pretty excited about that.

YDSTIE: Right now, Whitsitt does not offer health insurance to her employees, though she says it's a goal. And she believes it'll happen, because she expects to hit the 50-employee threshold in the next couple of years.

WHITSITT: We keep seeming to need to hire more people. So that's a good thing, I think.

YDSTIE: Given the narrow profit margins in the food business, Whitsitt is not quite sure how the company will afford it. But for now, she's discovered that one provision of the Affordable Care Act is a boon for her young business and many of its young employees.

WHITSITT: The bulk of our employees are 26 or under, and most of them are insured still by their parents now. And that didn't happen before. You know, that couldn't happen before.

YDSTIE: But every small business' situation is different. Jerry Heinrich has provided health insurance at his company, Deccofelt, for eight years. Even though his employee head count is just 24, he's worried the 50-worker threshold will come down and burden him with added regulations.

JERRY HEINRICH: You know, 50 is what they're starting out with. Are they going to stay with 50? Nobody knows, at this point.

YDSTIE: Heinrich says he could use more workers at his manufacturing company based in Glendora, California, but...

HEINRICH: This legislation has made it significantly riskier here. So, you know, I'm a lot more hesitant to bringing on new employees.

YDSTIE: But Colin Weightman just hired two new workers. His firm manufactures miniature precision sandblasters in Burbank, California, and he says the changes in healthcare don't drive his decisions.

COLIN WEIGHTMAN: I don't look at Obamacare as this is a reason to hire or let go of people. I look at what is the market demand in terms of what we can sell. And if I can make more money hiring another person and broaden our market, I'm going to do that.

YDSTIE: Eighteen years ago, Rick Snide and a partner founded Revolution Group, and IT consulting firm in Westerville, Ohio, just outside Columbus. From the beginning, they provided health insurance for their employees, but recently, premium costs have been rising 20 to 30 percent a year.

RICK SNIDE: They're telling us this year, we should expect at least 50 percent increase.

YDSTIE: Snide says when the Affordable Care Act was first contemplated, he was optimistic. Now, not so much.

SNIDE: I don't see the affordable part in the Affordable Care Act yet.

YDSTIE: Snide believes the insurance companies won the battle in Congress, and he worries premium costs will remain out of control. But his concerns aren't keeping him from hiring. Even though his firm has 41 employees, just under the 50-person threshold for regulation, he's looking to add seven workers right now.

Todd Allison at the small manufacturer Progressive Products in Pittsburg, Kansas, hopes that the Affordable Care Act will help contain costs by expanding his choices in the insurance marketplaces required in each state.

TODD ALLISON: I would like to see the exchanges go online, and I would like to see them work. And I honestly believe that free market economy and capitalism will drive the cost of health insurance down if you give it a chance.

YDSTIE: Allison, who already provides a healthcare plan for his 30-some employees, says implementation of the ACA hasn't slowed his hiring, either. John Ydstie, NPR News, Washington.

Copyright © 2013 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: