"I have owned businesses for decades and never in my life have I experienced so much anger and frustration as with Obamacare." So said Dr. Joseph P. Sergio, president of Sergio Corporation (South Bend, Indiana), in June 3 testimony in front of the Congressional Joint Economic Committee's hearing "Examining the Employment Effects of the Affordable Care Act."

Sergio Corporation owns and operates two small businesses. First Response is a disaster restoration company with clients across the nation. Polar Clean America cleans industrial facilities with an environmentally-friendly dry ice process.

"Our health insurance in 2015 will be our largest single vendor, even higher than construction material costs, and we are a construction company," said Dr. Sergio. "How do we adjust for a 24 percent increase in costs in one year, which is largely due to the increase in the number of ACA requirements and regulations that had to be incorporated into the plan?"

According to Dr. Sergio, complying with Obamacare "is necessitating a strategy in many small businesses to control costs by not rising above 50 employees. Therefore, the effort is toward fewer full-time employees, fewer 30-hour/week employees, more subcontract work, and more use of temporary services. This is not how to build quality and consistency in a workforce and create oneness of purpose."

He continued: "Instead of focusing on clients' needs, we worry about health care regulation. Instead of seeing opportunities to move forward and create jobs, we have to reassess to see whether it will push us over the employer mandate thresholds."

To be successful in a small business, according to Dr. Sergio, you must be able to accurately identify, forecast and control your expenses in order to create profits - profits that you can in turn reinvest in growing your business. "From the beginning, it has been clear that no one seemed to even read, much less understand, what was in the ACA," he said. "Small businesses, their advisors, tax professionals, and even insurance companies are frustrated with the complications it has caused and all the unintended costs for the great amount of administrative time to evaluate options and process the invasive application for care. Job creators have been struggling to understand it and interpret it. Therefore, we cannot accurately predict or manage the costs associated with bringing in more employees."

Another specific problem: "Our businesses have exhausted many options in dealing with the requirements of the Act," he said. "We had to drop a traditional PPO plan for a high-deductible Obamacare-compliant program. As a result, our employees and our company are paying more for an inferior policy."

According to Dr. Sergio, "Common sense and a basic understanding of human nature tell you that you will always get what you incentivize. You get more of what you reward and less of what you punish. The ACA punishes employment growth. The incentive is to not grow."

And, "In short, the ACA has made building a small business more stressful and has caused many businesses like ours to pull back and stop growing."

He also noted: "I know of one small business personally that closed two of its multiple retail stores, because it was the only way that it could keep to under 50 employees."

Instant Insights /

Small business and their growing frustration with PPACA

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