(Reuters) — The number of U.S. small businesses planning to start to offer health coverage for their employees next year slightly exceeds the number that expect to drop coverage, even as costs continue to rise, according to a survey released on Thursday.
The survey by the National Federation of Independent Business, a trade organization, was designed as the first of a three-year look at how small businesses are adapting to President Barack Obama's healthcare law. The survey did not, however, ask respondents if they were being influenced in their plans to start coverage by the new law.
Many of the Affordable Care Act's important regulations begin next year, although a requirement that employers with at least 50 workers supply health coverage was delayed until 2015.
If employers follow through on their plans for next year, “the net proportion of them offering (health insurance) would rise, breaking a decade-old trend,” said the report, which surveyed 921 businesses, with from two to 100 employees.
Businesses reported their healthcare costs increased nearly 12 per cent on average for this year, and said they responded by taking less profit and delaying business investment, according to the survey.
Health insurance premiums averaged US$6,271 a month for small businesses. Sixty-four per cent paid more per employee for healthcare than the prior year, with 6 per cent reporting a decline and the rest reporting no change. The survey did not ask for reasons behind the cost increases.
About two-thirds of employers reported responding to the higher costs by taking lower profits, while 40 per cent said they reduced or delayed business investment. Some also passed the costs onto employees: 37 per cent froze or reduced wages and 30 per cent raised the employee cost share for healthcare. Also, 30 per cent raised their selling prices as a response.
“They are absorbing a lot of that internally right now, which results in less investment in the kinds of things one would hope would occur to expand the economy,” William Dennis, the study's author and a senior fellow at the NFIB Research Foundation, told reporters in a briefing.
The study also found that 13 per cent of businesses plan to cut the hours of part-time workers next year, but that at most half of those cuts related to the healthcare law. The law defines a full-time worker as one who works 30 hours a week. Critics have said that businesses would cut hours of workers to avoid regulations.