Healthcare Reform Causes Hiring Freeze Among Many Small Businesses


As health care reform implementation looms, small businesses across the country are preparing their operations to contend with the changes the large-scale overhaul of the U.S. health care system will bring about. Specifically, a new survey showed small businesses are concerned with the employer mandate that requires them to extend insurance to the workforce, leading to a hiring freeze at many enterprises. With fewer employees around, entrepreneurs may find themselves spread too thin, and could benefit from a small business cash advance.

Most wary of reform

In a survey by Gallup, 41 percent of small business owners said they have halted their hiring plans because of health care reform. When asked if the Affordable Care Act was the direct cause behind the reduced number of employees at a particular business, 19 percent said “yes.”

Some entrepreneurs may have held back on hiring because of the ACA requirement that employers with more than 50 workers must provide insurance to employees or face a fine.

As a result of this, 24 percent are deciding between keeping and dropping insurance, while 18 percent have decreased employee work hours to part-time status in an effort to avoid extending coverage.

“We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn’t realize the extent they were concerned …” attorney Steven Friedman, whose firm commissioned the survey, told CNBC. “If small businesses’ fears are reasonable, then it could mean that the small business sector grows slower than what economic conditions otherwise would indicate.”

Small business employment wasn’t the only thing affected by the legislation, as 38 percent said they had scaled back their growth initiatives in light of the oncoming ACA implementation.

Overall, 48 percent of respondents felt the ACA would negatively affect their bottom line, while only 9 percent thought health care reform would be of benefit to their business. Thirty-nine percent foresaw no noteworthy impact from the legislation.

As businesses begin to change their operations in order to achieve compliance or further reduce costs incurred by new health care insurance mandates, many are finding it to be a hard time. If entrepreneurs are financially impacted – either by slowed growth or increased expenses – they can contact National Funding on getting a small business loan or working capital loan to tide over cash flow.

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