One in eight small businesses get insurance cancellations after ObamaCare passage
posted at 7:18 pm on July 26, 2011 by Ed Morrissey
Let’s take a breather from Barack Obama’s failure to lead on the debt crisis to his failed signature policy of ObamaCare. Despite his promise that passage of the health-insurance overhaul bill would allow people to keep their current health insurance, a new report from the National Federation of Independent Business shows that one in eight small businesses have had to stop offering insurance to their employees. The Daily Caller notes that the change has not been voluntary:
Among the most striking of NFIB’s findings was the number of employer health insurance plans that have been or will be eliminated since PPACA’s passage — 14 percent, or one in eight. Eliminating employer health care plans “is the first major consequence of PPACA that small-business owners likely feel,” the report said.
“We are not aware of any data suggesting we’ve had turnover anywhere near this level in the past,” said William J. Dennis, a senior research fellow at the National Federation for Independent Business.
The NFIB study also found 20 percent of small employers expect to significantly change their benefit packages the next time they renew their health insurance plans. Almost all of them expected to see diminished benefits, increased employee costs, or both.
The report makes clear that the change has mainly been imposed on small businesses. Left on their own, they would have continued coverage, but in response to ObamaCare, insurers have curtailed the plans offered to smaller employers:
The considerable changes expected are in part prodded by plans that have effectively been eliminated by insurers. One of the great “promises” of PPACA supporters was that insured people would be able to keep their current health insurance plan. As a practical matter that has not been true for a substantial number of small employers and their employees. Since enactment, one in eight (12%) small employers have either had their health insurance plans terminated or been told that their plan would not be available in the future (Q. 5).
There are some legitimate questions about this survey. Many of the questions asked are of opinions and projections rather than already-known events. The sample size is light as well, with only 750 businesses surveyed by NFIB. That’s not an inadequate sample for a national survey, but it’s not exactly robust either.
Still, the core question involves events that have already transpired, which is either cancellations or notices of cancellations from insurers. If
14 12% of the sample reported those outcomes, that means that 90 businesses have been either cut off or warned of cutoffs on their existing plans, with an impact averaging somewhere around 4500 employees. That’s a significant result, especially given the “you can keep your health-care plan” rhetoric coming from the White House while urging passage of ObamaCare.
It also demonstrates one reason why businesses aren’t enthusiastic about expansion. Under these circumstances, businesses can’t price the costs of their existing staffs, let alone additions to them through capital investment and expansion. When risk can’t be quantified with some degree of certainty, then risk simply isn’t taken — and we get the stagnation we’ve seen for the last two years.
Update: The percentage should have been 12% (one in eight), not 14% (one in seven). I’ve corrected the calculations as well; thanks to Ed R for the correction.