Three McHenry County small businesses have different levels of concern over what the Affordable Care Act will mean to them.
To the small Harvard manufacturer, the law is a foot in the door to socking all businesses with the mandate of providing health insurance, not just those with 50 or more full-time employees. To the Crystal Lake garden center, the law could end up costing a lot more than politicians are saying. And to the Woodstock computer company, the law is government getting in the way of a company already providing quality insurance.
And all three of them wonder whether the mandates that come with the law will mean a future decision over whether it’s worth it to grow. Aero Industries, a Harvard-based manufacturer of graphite components for high-temperature applications, has tripled its size in five years from operating out of a home to a plant with 11 full-time employees.
“You’d be foolish not to consider all of that,” co-owner Gary Kinshofer said.
The law, upheld Thursday by the U.S. Supreme Court, mandates that by 2014, all businesses with 50 or more full-time equivalent workers must provide affordable health care benefits. Penalties for not providing it start at $2,000 per worker, not counting the first 30.
The divisive law also has divided small businesses and the lobbying groups that represent them.
To the National Federation of Independent Businesses, which joined 26 states in opposing the law in court, it’s a job killer. State Director Kim Clarke Maisch said business under the 50-employee mark will see massive premium increases, and may decide it is better to dump insurance altogether and have employees buy from the state exchanges to be set up by 2014.
Or, she said, they may dump employees to stay below 50.
“How small businesses survive in this environment is to figure out how to keep their doors open and still comply with all the rules that go into running a small business,” she said. “If it means, ‘I’ve got to take 11 people off my payroll or turn all of my people into part-time,’ they’re going to do it.”
But the Small Business Majority says the law will help small businesses save money, and that the merits of the law have gotten lost in the years of political bickering since Congress approved it in 2010, government affairs director Rhett Buttle said. A poll by the group of 800 small-business owners in 10 states including Illinois concluded that more than half of them favored keeping the law, and one-third opposed it, after learning its substance.
“There’s been a political conversation going on rather than one about what’s actually in the law.” Buttle said.
On the surface, the coverage mandate would not affect many businesses, according to the government’s Small Business Administration. More than 96 percent of businesses with 50 or more employees already provide health insurance – likewise, 96 percent of American businesses have fewer then 50 employees, according to SBA data.
But local business owners worry about what could happen to the cost of what they already provide.
The problem for Tom Kusmerz, president of The Barn Nursery and Landscape Center in Cary, is trusting the government’s numbers. Kusmerz has 15 full-time employees that he insures, and bolstered his workforce to 45 during the last spring planting season.
“Whenever the government, from villages all the way up to federal, start implementing anything, they underestimate it so terribly that it ends up costing 50 [percent] to 300 percent more than what they estimated,” Kusmerz said. “I guess my biggest fear is, what will this end up costing us in the long run five or six years from now.”
With 150 employees, Other World Computing in Woodstock easily falls within the mandate. Company CEO Lawrence O’Connor said he has no intention of tweaking the company’s coverage. But he said he does not appreciate a law that interferes with his business when he has offered health insurance for years.
“It’s certainly cheaper for us to pay the penalty than grant the coverage, but we’re not going to do that. Absolutely not,” O’Connor said.
Like Kinshofer and Kusmerz, O’Connor said he worries about whether premiums, which have been rising for years, will spike as the law is implemented. And like Kinshofer, he said he wonders whether the rules could one day make it counterproductive to grow and add new jobs.
“It certainly makes you wonder whether it’s worth growing beyond a certain point,” O’Connor said.