The health insurance tax, which begins in 2014, will be levied on insurance companies, but they are expected to pass it through to businesses. Nationally, the tax is expected to cost businesses $8 billion, said Barbara Quandt, state director for the federation.
She says the tax will disproportionately affect small businesses, which tend to purchase fully insured plans under which the insurance company, rather than the employer, bears the risk of covering workers’ medical costs.
“They’re frightened,” Quandt said. “In many cases, they are paralyzed. They’re making no decisions. They’re not growing. They are trying to sort out how this law is going to impact their business.”
The choices won’t be easy. Some employers are cutting workers’ hours or have stopped hiring to avoid the mandated insurance coverage provision for companies with more than 50 workers.
“They are looking at their growth strategy – should they shrink, should they revise their workforce to get under 30 hours?” said Kimberly Hollis, director of business solutions with Tilson Inc., a human resources outsource firm in Greenwood.
Timothy Slaper, director of economic analysis at Indiana University’s Indiana Business Research Center, said he expects the health-care law to have “a detrimental effect” on Indiana businesses. In a study last year, he took data from 2003 to 2008 and modeled what the impact of the Affordable Care Act would have been. He found that about 12,700 new jobs would have been at risk. Given the sluggish economic recovery, the impact today could be even greater, he said.