Most jobs in the U.S. are created by small business that employ 25 or fewer workers. Many of these low-wage jobs often pay the federal minimum wage of $7.25 an hour and employers usually do not offer health insurance coverage.
This was supposed to change after the passage of Obamacare but in an audit performed by the Government Accounting Office (GAO) it was found that fewer small business employers were using the Small Employer Health Insurance Tax Credit offered by the Democrats in Congress in passing Obamacare than previously estimated. The reality appears to be that small businesses are not offering health care protection to employees because of the costs involved.
Among other reasons for not taking advantage of this Obamacare incentive is that the credit is not large enough for employers to begin offering health insurance. In addition, according to the GAO report small business owners tend not to offer health insurance because:
- Health insurance costs drive up total compensation costs for low-wage employees
- Low wage employees generally prefer wages over insurance benefits as part of total compensation.
The complexity of eligibility requirements is also cited:
- Amount of data that must be recorded and collected often taking as long a 4 to 7 hours to gather the information
- Forms that must be completed are too complicated and the time it took to do the paper work did not justify costs
In addition, insurers of small employees face higher per-employee fixed costs for billing and marketing. Risk pooling across a larger group stabilizes the average insurance costs while the smaller groups found in small businesses raise costs resulting in higher premiums.
In May 2012, even the Obama administration finally admitted that fewer business than expected number have signed up for the health insurance tax credit. According to Sen. Jim DeMint (R-SC) of the 3.2 million small businesses that are eligible, only 11% are taking advantage of the credit.
While Americans wait for the U.S. Supreme Court decision about the future of Obamacare, apparently most small business owners have have already rejected the healthcare insurance tax credit.