Economy & Budget

Supreme Court health care decision costly to small business

Supreme Court health care decision costly to small business
This artist rendering shows Mike Carvin, counsel for the National Federation of Independent Businesses, speaking before the Supreme Court.

Following President Obama’s enactment of the Patient Protection and Affordable Care Act, the National Federation of Independent Business (NFIB) took the lead role in the fight to strike down the Act. Rather than providing small businesses with more choice, competition and affordability in the health insurance market, the Affordable Care Act did the opposite. Even more disturbing, this law transforms our nation’s health care system using new mandates that limit freedom.

NFIB and the small business owners we represent were extremely disappointed with the Supreme Court’s decision to uphold the individual mandate. After holding that Congress lacked the power to compel individuals to purchase health insurance under the Commerce Clause, the high court blessed the mandate as constitutional under Congress’ power to tax. This is a distinction without a difference for the small business owners whom we represent, who are left with a law full of new mandates and taxes that will only increase the cost of doing business as they struggle to make payroll in this sluggish economy.

To quote Mike Carvin, the Jones Day attorney who argued the case before the Supreme Court on behalf of NFIB, “the procedure was a success, but the patient died.” We succeeded in preventing Congress from forcing Americans to buy something they do not want. Yet, that is a hollow victory indeed, since the government can now coerce Americans to do its bidding by forcing us to choose between paying higher taxes or buying the product or service the government thinks is best for us.

Surely the nation’s founders would have been just as opposed to the federal government taxing them for failing to buy a product as they would be opposed to an out-and-out regulation. Indeed, can you imagine how much faster they would have taken up arms against the Crown if Parliament had insisted upon taxing them for boycotting English goods—a boycott which began in protestation of new taxes?

The Supreme Court made clear that it was not passing judgment on the wisdom of the Affordable Care Act. It said that the propriety of the Act must ultimately be decided through the political process—Americans must vote out our representatives if we disagree with them. NFIB is continuing its efforts to repeal the Affordable Care Act because of the devastating effects it will have on small business.

Big concerns: Employer mandate, “hit tax”

Chief on our list of concerns is the “employer mandate,” which will impose costly penalties on businesses with more than 50 employees if any of their employees take advantage of government health care subsidy programs. This will not only prove to be a costly hindrance for businesses that are already struggling, but will affirmatively discourage job creation and encourage downsizing.

Even more absurd is the “hit tax” which the Affordable Care Act imposes upon the insurance plans that small businesses most often purchase. This tax actually makes it harder for small businesses to insure their employees because they must now pay the added costs of this tax which is passed on in the cost of higher insurance premiums. So contrary to popular belief, the Affordable Care Act is actually raising the cost of health insurance for many low- and middle-class Americans.

Free market solutions

NFIB has long advocated practical free-market solutions, which would cut health care costs without imposing undue burdens on America’s job creators.

The current tax code discriminates against many individuals and self-employed who buy their insurance in the individual market but are not allowed to deduct their insurance costs like those in large businesses do. NFIB believes there should be equality in the tax code when it comes to purchasing health insurance.

Tax and insurance regulations should allow for a defined contribution option for employers. This would make health insurance simple for employers and would give employees a broad range of choices. With defined contribution health insurance, an employer could contribute pre-tax funds toward employees’ insurance that employees could use to buy the plan of their choice.

Big business, big labor and big government have access to health care plans that cost much less than those available to small business owners because their risk pools are much larger and they can operate across state lines. Small businesses should be allowed to join together across state lines to find the best plan at the best price.

People should be able to move from one job to another, between a job and no job, and from state to state without losing insurance coverage or encountering excessive cost increases for changing. Insurance laws should make it possible for those who maintain their coverage to continue doing so after changing jobs or stopping work altogether.

Medical liability lawsuits are a major contributor to high health care costs. If we can reform current medical liability laws, there would be a reduction in health care costs. Doctors have been forced into practicing defensive medicine by trial lawyers and have resorted to ordering unnecessary tests, procedures and medications because of fear of litigation.

By limiting freedom and choice, while raising taxes and increasing regulation, the Affordable Care Act is an anchor around the necks of small business owners. Despite our supreme disappointment with the Supreme Court’s decision to let this law stand, NFIB will continue its fight for small business to have real choice and competition through private-market solutions that do not trample on individual freedom.

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