Small business and the health care repeal
"Every day America's entrepreneurs and small-business owners are finding more ways to access affordable health care insurance because of the Affordable Care Act. We have some very important data recently, which is that after years of dropping coverage, the number of small businesses offering health insurance to their workers is actually going up. This is according to the Kaiser Family Foundation: nine percent more small businesses with less than 200 employees provided coverage in 2010 compared with 2009, and for those with less than 10 employees, the expansion in coverage was even bigger. It was 13 percent."
--Karen G. Mills, administrator of the Small Business Administration, January 18, 2011
As the House Republican push to repeal last year's health care law comes to a final vote Wednesday, Obama administration officials and Democratic lawmakers have been pressing their case that repeal would have disastrous consequences. A telephone conference call on Tuesday organized by the White House was typical, with both SBA Administrator Mills and acting Deputy Commerce Secretary Rebecca Blank speaking to reporters about the impact of repeal on U.S. business. Mills opened her statement with the assertion above. Sounds impressive, but is it?
There are red flags whenever someone attributes huge swings in data to a single cause--in this case the new health care law. Could so many more small businesses really be signing up for health insurance because of a law that only passed ten months ago?
The answer is no.
Mills, to her credit, cited her source, the Kaiser Family Foundation 2010 annual survey of Employer Health Benefits. And her statistics are correct. It's just that they have nothing to do with the new health care law.
First, the survey was taken between January and May of last year, so much of the data was collected before the law even passed. Final passage of the health care bill was so uncertain at the start of 2010--remember the unexpected victory of Republican Scott Brown in the Massachusetts Senate race and the loss of the Democratic filibuster-proof majority?--that few companies would be making business decisions on the assumption the health care overhaul would be signed into law.
Second, the Kaiser report specifically says the analysts were puzzled by the shift in small business figures, but were pretty sure it did not mean more firms were signing up to provide health insurance to their employees. "Given the slow economic recovery and high unemployment, it seems unlikely that many firms began offering coverage," the report said. "A possible explanation is that non-offering firms were more likely to fail during the past year, and the attrition of non-offering firms led to a higher offer rate among surviving firms."
"We were just guessing, obviously," said Gary Claxton, main author of the report. "But certainly we have not tried to say it was because of the ACA," the Affordable Care Act. He said it was unlikely many firms surveyed in the few weeks after the bill passed would have added health insurance because they would have had not enough information about what was in the legislation.
A third problem is that the data set for small firms is too small to be significant. Kaiser surveyed more 2,000 companies, but only about 100 had fewer than ten employees. For the 2011 survey now in progress, Kaiser is asking whether the health care law is encouraging more small firms to sign up for coverage. But Claxton said that the sample size would likely be too small to reach any firm conclusions.
A similar survey in California, the California Employer Health Benefits Survey, was taken after the law passed, from April though July of 2010. It showed the worker coverage at small and large firms continued on a downward slope, though the differences from year to year were not statistically significant. The survey did find, however, that 60 percent of the firms in California with fewer than 25 workers were aware of a tax credit in the bill that would allow small firms to offset premium contributions--and that 57 percent of those firms were planning to take advantage of the tax provision. There is some anecdotal evidence that health insurance companies are aggressively marketing the tax credit to sign up new customers, but no rigorous survey has proven that the law has made an impact in the overall percentage of small businesses offering health insurance.
The Pinocchio Test
There may be some emerging evidence that small businesses are intrigued by provisions in the health care law but Mills erred badly when she touted "some very important data" about the impact of the law. A simple check of the report she cited showed exactly the opposite. A spokesman for Mills said she "did not specifically say that Kaiser attributed the increase to the tax credits" but that's a stretch. The clear implication of her comments was that the Kaiser survey is evidence of the success of the health care law. Not so.
Follow The Fact Checker on Twitter @GlennKesslerWP
Posted by: VirginiaIndependent | January 19, 2011 8:31 AM | Report abuse
Posted by: bcarte1 | January 19, 2011 9:07 AM | Report abuse
Posted by: ddoiron1 | January 19, 2011 10:27 AM | Report abuse
Posted by: Fontana1 | January 19, 2011 10:27 AM | Report abuse
Posted by: nychap44 | January 19, 2011 10:36 AM | Report abuse
Posted by: nychap44 | January 19, 2011 10:47 AM | Report abuse
Posted by: cmdriker | January 19, 2011 10:52 AM | Report abuse
Posted by: rheckler2002 | January 19, 2011 11:23 AM | Report abuse
Posted by: Krazijoe | January 19, 2011 11:24 AM | Report abuse
Posted by: andrew23boyle | January 19, 2011 1:40 PM | Report abuse
Posted by: LHO39 | January 19, 2011 1:43 PM | Report abuse
Posted by: postfan1 | January 19, 2011 1:44 PM | Report abuse
Posted by: postfan1 | January 19, 2011 1:50 PM | Report abuse
Posted by: DrainYou | January 19, 2011 2:02 PM | Report abuse
Posted by: 6thsense79 | January 19, 2011 2:10 PM | Report abuse
Posted by: dnbulmer | January 19, 2011 2:57 PM | Report abuse
Posted by: DrainYou | January 19, 2011 3:05 PM | Report abuse
Posted by: Pembroke60 | January 19, 2011 4:23 PM | Report abuse
Posted by: Northstar1 | January 19, 2011 5:05 PM | Report abuse
Posted by: Northstar1 | January 19, 2011 5:06 PM | Report abuse
Posted by: annnort | January 19, 2011 9:36 PM | Report abuse
Posted by: annnort | January 19, 2011 9:45 PM | Report abuse
Posted by: drowningpuppies | January 19, 2011 10:19 PM | Report abuse
Posted by: sportsman885 | January 20, 2011 4:31 AM | Report abuse
Posted by: dove28 | January 23, 2011 9:51 AM | Report abuse