As ObamaCare faces crucial Supreme Court test, some small business owners are rallying behind the law

The National Federation of Independent Business and the Small Business Majority certainly agree on one thing. When it comes to their constituents’ top concern, rising health care costs are number one – without a magic bullet.

How is it, then, that they have found themselves on opposite sides of the most yawning political divide in recent memory – the fight over the Patient Protection and Affordable Care Act, popularly (and, some would say, pejoratively) known as ObamaCare?

This week, the U.S. Supreme Court will hear three days of arguments on the constitutionality of the historic and highly controversial legislation. Leading the charge is the NFIB, which is challenging the validity of the law’s provision requiring individuals to either purchase health insurance or pay a fine.

According to the NFIB, a nonpartisan organization that represents 350,000 small business owners across the country, the effort to kill the law is driven largely by the group’s members.

“Our membership has been supportive of our legal challenge to ObamaCare from its inception,” said NFIB Grassroots Director Janine P. Clifford in a recent press release. “In fact, our members are the reason we became involved in the lawsuit in the first place. We want all of our members as well as the public to learn more about our efforts – both legislative and legal – to see that this law does not continue to threaten their individual liberties, or their bottom lines.”

The NFIB also claims the law will have, and is already having in some cases, a major financial impact on small businesses, “burying them under a deluge of new rules and hidden taxes that will hurt job creation and severely hamper individual economic freedoms.”

Public opinion split

Not so fast, say members of the Small Business Majority, a California-based advocacy and research group founded and run by small business owners.

Last week, the SBM hosted a media conference call in order to help nudge public opinion in favor of the Affordable Care Act.

Of course, the debate over the health care reform law will likely remain hotly contested, regardless of what the Supreme Court decides. A recent Kaiser poll found that Americans are almost evenly split on the law, with 41% holding a favorable opinion and 40% an unfavorable opinion.

Judging from the NFIB’s central role in the controversy, one might assume that small business owners are more or less unified in opposition to the Affordable Care Act. But, says John Arensmeyer, CEO of Small Business Majority, many small business owners, faced with skyrocketing health care costs, actually welcome the new law.

“In all of the research we’ve done over the last five or six years, small business owners have said that rising health care costs are their number one problem,” said Arensmeyer. “Small businesses have been mired in a system that has drained their coffers … and hampered their ability to play their vitally important role as the nation’s primary job creators.

“When you look at the trend lines for costs of insurance, they’ve more than doubled in the last 10 years for small businesses, and the rate of coverage for small businesses is precipitously declining, despite the fact that our polling shows that well over 80% of small businesses want to offer coverage.”

According to Arensmeyer, the economic forecast is even bleaker if health care reform is taken out of the picture. In 2009, the SBM commissioned an economic analysis by MIT economist Jonathan Gruber, who found that without reform, small business health care costs would double to $2.4 trillion by 2018, and that 178,000 small business jobs would be lost as a result. Arensmeyer also notes that the SBM’s polling has shown that among small businesses that are currently offering health care coverage to employees, 73% said they are struggling to do so.

Several of the provisions written into the Affordable Care Act, says Arensmeyer, are favorable to small business. Among these are tax credits and cost containment measures that are already allowing small businesses to “see some light at the end of the tunnel.”

In addition, says Arensmeyer, starting in 2014, small business owners will be able to take advantage of state health insurance marketplaces that should help keep them competitive with larger corporations, which already wield significant negotiating power that allows them to hold premiums down.

“Right now, small businesses pay 18% more for the same coverage as other businesses,” said Arensmeyer. “And a large reason for that is that big businesses have the opportunity to pool together and negotiate more favorable rates in the coverage, something small businesses haven’t been able to do.”

A growing burden

While NFIB says its decision to challenge the Affordable Care Act was driven by its constituency, at least one of its members is staunchly against repeal of the law.

Mike Roach, an NFIB member who also serves on the SBM’s Small Business Network Council and participated in the conference call, says repealing the law would actually be a step backward for small business owners across the country.

“Despite everything that I’ve heard said about the Affordable Care Act, arguments supporting it and those opposing, what I’ve never heard anyone argue about is the tremendous burden that health insurance has been and continues to be for small businesses,” said Roach, who has run Paloma Clothing in Portland, Ore., since 1975. “If nothing was done, we’d either have to cut benefits or lay off highly valued employees, neither of which we want to do. The fact of the matter is that the new law has already started to help us.”

According to Roach, his business was able to shave $5,500 off its $17,000 health care bill in 2010 because of the small business tax credit provision written into the law.

“Hundreds of thousands of us are benefiting from the Affordable Care Act in multiple ways,” said Roach. “We hope the Supreme Court Justices are aware of that fact as they deliberate on this historic piece of legislation.”

Freedom to create jobs

For its part, the NFIB definitely doesn’t have its head in the sand when it comes to the spiraling cost of health care. On that point, it can find plenty of common ground with the SBM, noting that its members have told the group since 1986 that rising health care costs are the most concerning issue facing small businesses. Its prescription is radically different from that of the SBM, however – a fact that has propelled the group to the center of what promises to be a historic Supreme Court decision.

At the heart of the issue for the NFIB is the question of autonomy – and whether small businesses will ultimately have free rein to do what they do best: create jobs.

“At the same time that President Obama is asking small business owners to create jobs, his very health care law is preventing them from doing so,” said Susan Eckerly, NFIB’s senior vice president of federal public policy, in a September press release. “In fact, small business owners will tell you that they are suffering a crisis of confidence right now that prevents them from expanding and hiring; how do they move forward with job creation when the unknown costs stemming from the policies of the past few years continue to stand in their way?”

According to the SBM, however, that attitude is not just wrongheaded, it’s also potentially ruinous for the future of small businesses.

“There’s still a lot of work to be done, and we’re the first to say that this law is far from perfect, but what’s important to keep in mind is it’s a significant improvement over the status quo; it’s a huge step in the right direction,” said Arensmeyer. “The status quo is and has been completely unsustainable, and indeed, overturning the law now would be absolutely disastrous for small businesses. It would again mire them in a broken system, stunt their growth, and bleed them dry.”

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