Health care costs are squeezing America's small business owners, leading more of them to drop coverage for their workers. But not Nancy Clark.
Clark, 48, who runs an advertising firm Glen Group in North Conway, N.H., has continued providing health benefits to her workers, even though she knows it's preventing her from handing out raises, hiring more employees and investing in her business.
"I just feel health insurance is so important that I just can't take it off the table," Clark told The Huffington Post. "I know how important it is for myself and my family. I need it, and if I'm going to do it myself, I'm definitely going to offer it to everyone else," she said. "I truly believe that health care is a right."
Clark does not, however, speak for all small business owners. Like the rest of America, small businesses are divided over President Barack Obama's health care law. According to survey data issued this month by Small Business Majority, an advocacy group that supports the law, exactly 50 percent of small business owners don't want the law repealed, compared to 34 percent who favor repeal.
The future of health care for American small businesses and their workers now lies with the Supreme Court, which is expected to issue a decision by the end of the month on whether the health care reform law is constitutional.
"If the whole law went away, we'd be right back at the status quo," Larry Levitt, a senior vice president of the Henry J. Kaiser Family Foundation, a health-care research organization in Menlo Park, Calif., said. Health insurance premiums are rising and fewer small-business employees get health benefits at their jobs today. Those trends will continue into the future without the reforms, Levitt said. According to Levitt, if the Supreme Court invalidates Obama's law, Congress isn't likely to attempt comprehensive health care reform again any time soon.
"There's a lot in this law that benefits small businesses and their employees," Levitt said. Some of those benefits include tax credits for small companies and state-based "exchange" marketplaces where insurers will compete for business starting in 2014. The law's authors believe this will lower prices and increase choices overall. These policies should make health insurance more accessible, more comprehensive, and more affordable for many small companies, Levitt said.
The National Federation of Independent Business, the most prominent lobbying organization for the field, joined the U.S. Chamber of Commerce and other big-business groups in opposing Obama's plan, objecting to provisions including a requirement that all companies with at least 50 employees provide health benefits or pay a penalty. The National Federation of Independent Business is also one of the plaintiffs, along with 26 states, that brought the lawsuit before the Supreme Court. Glen Group isn't a member of the organization, Clark said.
Unlike those plaintiffs, Clark is optimistic that the health care reform law enacted in 2010 could help defray her company's health care costs, or at least slow down the rampant growth in health insurance prices she's seen since she bought the firm in 1998. Premiums have risen by as much as 31 percent in a single year and never less than 14 percent, she said.
Glen Group employees still have insurance even though the economy has hammered the company since 2007, reducing it from 26 full-time workers to six. This year, workers pay $212 per month and the company picks up an equal share for the plan, which carries a $3,000 annual deductible that must be paid off before full benefits kick in, Clark said. She pays $1,300 a month to cover her family of six.
"I had a really tough four or five years during this recession. Really tough. And I never put the health care on the chopping block," Clark said. "If I was able to survive that, I'll be able to survive the next increase. I'll just figure out a way."
That's not going to be easy. Health care costs are climbing: American families, businesses, and taxpayers spent an estimated $2.7 trillion on health care last year, accounting for 17.9 percent of the entire U.S. economy, according an to government data issued this month. Higher costs translate into increasingly unaffordable health insurance. Small employers have it even worse because don't have the bargaining power big companies use to negotiate lower rates from insurers.
Throwing out the law, which is just one of several paths the Supreme Court could take, would be a "mistake," Clark said.
Her company already has gotten some small amount of relief in the form of $3,800 in tax credits over 2010 and 2011, she said. Clark is more hopeful about the health insurance exchange because she currently has only two health insurance companies from which to choose. "It's an attempt at a solution and I really like that. Why not try it?" she said.
"If it goes away, I'll just be incredibly disappointed to the bottom of my toes but our business will march on and we'll move forward, and we'll keep raising our hand and saying, 'Hey, can somebody fix health insurance for small businesses?'"
Fewer Americans are getting health benefits from their employers than in decades past. About 160 million people are covered by job-based health insurance, making it the number-one source of health coverage, according to data from the Kaiser Family Foundation. But the percentage of employers providing coverage is shrinking -- 60 percent of companies offered health benefits last year, down from 68 percent a decade before, as shown by a report from the Kaiser Family Foundation and the Health Research and Educational Trust.
Workers at small companies are less likely to be offered health benefits than their counterparts at large firms. Compared to 99 percent of companies with at least 200 employees, just 59 percent of smaller firms provided health insurance. Only 48 percent of companies with fewer than 10 employees, like Glen Group, offer health benefits.
"People tell me that I'm unusual because at many, many other companies, it's the first thing to go," Clark said. "I can't do that."
Round 1: The District Courts Divide
U.S. District Judge George Caram Steeh, a Clinton appointee sitting in the Eastern District of Michigan, released the first major Affordable Care Act decision in October 2010. In <a href="http://www.mied.uscourts.gov/news/docs/09714485866.pdf" target="_hplink"><em>Thomas More Law Center v. Obama</em></a>, Steeh sided with the government to hold the law constitutional. "The decision whether to purchase insurance or to attempt to pay for health care out of pocket is plainly economic," Steeh wrote. "These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers and the insured population, who ultimately pay for the care provided to those without insurance."
Round 1: The District Courts Divide
At the end of November 2010, another Clinton appointee, Judge Norman Moon of the Western District of Virginia, agreed with Judge Steeh. In <a href="http://www.vawd.uscourts.gov/OPINIONS/MOON/LIBERTYUNIVERSITYVGEITHNER.PDF" target="_hplink"><em>Liberty University v. Geithner</em></a>, Moon wrote that "by choosing to forgo insurance, plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now, through the purchase of insurance."
Round 1: The District Courts Divide
In December 2010, however, Judge Henry Hudson, a George W. Bush appointee sitting in the Eastern District of Virginia, ruled otherwise. In <a href="http://media.washingtonpost.com/wp-srv/metro/docs/Hudson_ruling.pdf?hpid=topnews" target="_hplink"><em>Virginia v. Sebelius</em></a>, Hudson struck down the individual mandate, writing that "an individual's personal decision to purchase -- or decline to purchase -- health insurance from a private provider is beyond the historical reach of the commerce clause." Importantly, Hudson also held that the individual mandate is severable from the rest of the Affordable Care Act, which means a court can strike it down while allowing the law's remaining provisions to stand.
Round 1: The District Courts Divide
Finally in January 2011, Judge Roger Vinson, a Reagan appointee in the Northern District of Florida, evened the score but upped the ante. In <a href="http://www.scribd.com/doc/47905937/Health-Care-Ruling-by-Judge-Vinson" target="_hplink"><em>Florida v. Department of Health and Human Services</em></a>, not only did he strike down the individual mandate as exceeding Congress' power under the commerce clause, but he also took the whole health care law down with it. "The act," Vinson wrote, "like a defectively designed watch, needs to be redesigned and reconstructed by the watchmaker."
Round 2: The Appeals Courts Split
In June 2011, the U.S. Court of Appeals for the 6th Circuit <a href="http://www.ca6.uscourts.gov/opinions.pdf/11a0168p-06.pdf" target="_hplink">upheld, by a 2-1 vote</a>, Judge Steeh's decision in <em>Thomas More Law Center</em>. Circuit Judge Jeffrey Sutton, a George W. Bush appointee, was the first judge chosen by a Republican president to reject the commerce clause challenge, writing that "no one must 'pile inference upon inference' to recognize that the national regulation of a $2.5 trillion industry, much of it financed through" national health insurance companies, "is economic in nature." He joined Judge Boyce Martin, a Jimmy Carter appointee, in the majority, while Judge James L. Graham, a Reagan appointee, wrote a vigorous dissent. In August, the 11th Circuit, reviewing <em>Florida v. HHS</em>, <a href="http://www.uscourts.gov/uscourts/courts/ca11/201111021.pdf" target="_hplink">produced a near mirror-image result</a>. Judge Frank Hull, a Clinton appointee, joined the Reagan-appointed Judge Joel Dubina to affirm District Judge Vinson's decision to strike down the individual mandate. Judge Stanley Marcus, a Clinton appointee, dissented, quoting heavily from Sutton's 6th Circuit concurring opinion. All three 11th Circuit judges found the mandate severable from the rest of the Affordable Care Act, reversing District Judge Hudson's decision to deep-six the entire law. Both appeals courts unanimously rejected the government's taxing power argument, insisting that if Congress had thought the penalty for not buying insurance was a tax, it would have explicitly called it a tax. On this issue, a third appeals court created another circuit split.
Round 2: The Appeals Courts Split
In September 2011, the 4th Circuit dismissed two challenges to the health care law, finding that the plaintiffs did not have standing to bring their lawsuits. The panel did find that <a href="http://pacer.ca4.uscourts.gov/opinion.pdf/102347.P.pdf" target="_hplink">the penalty for not buying insurance was a tax</a> -- a good sign for the government's defense of the law. But rather than hold that the individual mandate was a valid exercise of Congress' taxing power, Judges Diana Gribbon Motz, a Clinton appointee, and James Wynn, an Obama appointee, said that another federal law, the Anti-Injunction Act, prevented the plaintiffs from challenging the mandate until they actually had to pay the tax -- which cannot happen before the provision goes into effect in 2014. The third judge, Obama appointee Andre Davis, said he wouldn't have dismissed the lawsuits and would have upheld the individual mandate based primarily on commerce clause ground. Regardless of the methodology, the Obama administration was now winning 2-1 in the courts of appeals against the Affordable Care Act's challengers.
Final Round: The Supreme Court Takes The Case
The Supreme Court is most likely to choose to hear a case for one of three reasons: The constitutionality of a federal law hangs in the balance, the circuit courts disagree on the same issue, or the solicitor general advises the Court to take the case. Cases that fulfill just one of these considerations stand a good chance of reaching the justices. The health care cases had all three. In November 2011, the justices <a href="http://www.huffingtonpost.com/2011/11/14/obama-health-care-law_n_1092387.html" target="_hplink">agreed to review</a> the 11th Circuit's decision. To signal how seriously it took the challenges, the Court soon thereafter scheduled six hours of oral argument to take place from March 26 to 28, 2012. Normally, even for blockbuster cases, the justices only allot one hour for oral argument.
Final Round: The Supreme Court Hears Oral Argument
All eyes turned to the Supreme Court in late March 2012 when the justices heard oral argument and gave their first public hints of where they stood on the Affordable Care Act's constitutionality. On the first day, March 26, liberal and conservative justices alike <a href="http://www.huffingtonpost.com/2012/03/26/health-care-law-supreme-court_n_1373455.html" target="_hplink">showed little interest</a> in following the 4th Circuit's decision to throw out the challenge to the health care law on a technicality before ever reaching the constitutional merits of the individual mandate. That display of unity disappeared on Tuesday, March 27, as the Court took on the <a href="http://www.huffingtonpost.com/2012/03/27/supreme-court-health-care_n_1373469.html" target="_hplink">main event</a>: two hours of argument over the mandate. The Court's four Democratic appointees all appeared to find the mandate well within Congress' powers to regulate interstate commerce, as the 6th Circuit had held; the Court's five Republican appointees, in concert with the 11th Circuit, seemed to think otherwise. Only in the final moments did swing vote Justice Anthony Kennedy soften his tone by musing aloud whether the health insurance market is different enough, after all, to allow a mandate to prevent cost-shifting where it might not be permissible in another market. "[M]ost questions in life are matters of degree," he said. On Wednesday, March 28, the justices <a href="http://www.huffingtonpost.com/2012/03/28/health-care-case-supreme-court-john-roberts_n_1386692.html" target="_hplink">considered</a> what other parts of the Affordable Care Act would fall if they found the mandate unconstitutional. No majority emerged. Several justices agreed with the challengers that the whole law must fall. Several others agreed with the Obama administration that two key (and popular) provisions could not survive without the mandate. Still others indicated some sympathy for severing the mandate alone and allowing the rest of the law to stand. A decision is expected by the end of June.