Industry Market Trends

Survey: Health Care Law Prompting Small Business Cuts

Jul 17, 2013

Small business owners are preparing to cut staff hours and full-time employees as requirements related to the health care law rank as a top challenge for firms, according to a recent survey by the U.S. Chamber of Commerce.

According to the Small Business Outlook Survey results, released yesterday, concerns over the health care legislation known as the Patient Protection and Affordable Care Act (ACA), are growing at a considerable rate. Of the 1,304 small business executives that were surveyed between June 21 and July 8, 49 percent indicated that the health care reform signed into law in 2010 is their biggest challenge, compared to 42 percent  for a earlier survey in June. Anxiety over the law has grown by 10 points since June 2011.

The health care reform will require employers to provide health coverage to their full-time "equivalent" employees and dependants if they have 50 or more people on staff. While created to extend the affordable healthcare insurance to all U.S. citizens, the employer mandate-which the Administration recently delayed by a year to 2015-is instilling anxiety and prompting changes in small businesses across the U.S.

As 27 percent of small businesses claim that they will cut hours to reduce their full-time staff, 24 percent will cut hiring. Full-time employees who work 30 hours a week or more will be replaced by part-timers, according to 23 percent of owners surveyed. Such findings reflect results of a separate May survey by Gallup, which found that 48 percent of small business owners believe that the ACA will be "bad for business."

In that survey, most (52 percent) said that the ACA will reduce the quality of healthcare that they and their employees will receive.

Only a small percentage of business owners-17 percent-indicated that they added employees over the last two years, according to the outlook findings. Plans for new hires are also largely on hold, with only one in five small business owners indicating that they will add more staff in the next two years.

The health care law has also prompted outsourcing among manufacturing owners, according to a recent Empire State Manufacturing Survey, which found that 11 percent of firms indicate that they have already begun to outsource, with 39 percent reporting that they will increase the prices for their customers as a result.

While the health care law ranks as top challenge for employers, it ranks closely other key concerns, such as over-regulation (44 percent), economic uncertainty (44 percent) and America's growing debt and deficit (40 percent). By contrast, 11 percent of respondents indicated that a lack of qualified or educated employees is a top concern.

How has the health care law impacted your business? Share your story with us by commenting below.