Burying the Lead: What the NFIB Obamacare study really tells us about the Affordable Care Act and small business

Small businesses plan to increase health care offering next year, breaking a decade-old trend

The NFIB has made no secret of their distaste for the Affordable Care Act.  After all, the right-wing small business lobbying group was a lead plaintiff in the failed lawsuit overturn the health care law. 

So, when the NFIB last month released the first report in a planned series of three annual reports based on a longitudinal survey of small employers designed to measure “actual changes associated with the introduction of the Affordable Care Act,” it was not surprising that they did so with a decidedly negative media spin: “Small-Business Healthcare Survey Reveals Reality of Painful Premium Increases.”

However, buried in the 56-page report are findings that tell a remarkably different story about how the Affordable Care Act is helping small businesses and their employees access quality, affordable health care.


“Breaking a decade-old trend:” Small businesses plan to increase insurance offerings next year.

Buried on page 26 of the NFIB’s report, is perhaps its most important finding: an increasing share of small business owners plan to offer insurance coverage next year. 

According to the NFIB’s report, “The number of small businesses offering employee health insurance fell from last year to this, another in a long series of declines.  The size of the decline is modest.  However, small employers expect that trend to change this year.  More plan to introduce the benefit than drop it.  … If small employers follow those plans, the net proportion of them offering would rise, breaking a decade-old trend.”

The NFIB is correct to point to the trend of declining small business health insurance offerings.  Kaiser Family Foundation’s 2013 Annual Employer Health Benefits Survey reports that 57 percent of small firms (3-199 workers) offered health insurance in 2013 compared to 65 percent in 2003, an 8 percent decline.  Using somewhat different methodology, a 2013 Robert Wood Johnson Foundation report found a 9.7 percent decline in insurance offerings from small employers (under 50 employees) from 1999/2000 (47.2 percent) to 2010/2011 (37.5 percent). 

Forty-six (46) percent of the small employer respondents (2-99 employees) to NFIB’s survey reported offering insurance in 2013, down from 48 percent the previous year, following the historical trend.  However, when asked about their plans for next year, 48 percent planned to offer, reversing the trend with a two percent increase. 

The fact that small business owners have increased optimism about offering health insurance next year is a big deal.  If small employers follow through on those plans, it would be cause for celebration. 

Perhaps because the headline “small businesses plan to increase insurance offerings next year” does not align with the NFIB’s political agenda, this significant finding is buried on page 26 of the report and receives no mention in the organization’s press release. [i]


Change in Insurance Costs: NFIB ignores evidence of premium moderation, hypes premium hikes

The NFIB’s report offers a misleading analysis of changes in insurance costs due to flawed survey methodology, while ignoring evidence of premium moderation. 

The NFIB survey asked small employers who offer insurance whether the per-employee cost of their current health plan was more (64 percent), less (6 percent), or about the same (29 percent) as in previous years (Q#41).  Respondents were then asked to estimate the per employee percentage change in the cost of this year’s plan to the previous year’s plan, however this follow-up question appears to only have been asked for employers who witnessed price increases (Q#51). 

In analyzing survey results, NFIB writes “The median price increase, incorporating in the calculation those with increased, stable, and lower prices, was about 6 percent, though the average increase was closer to 12 percent.”  It is impossible for NFIB to have made a calculation for the average change in price because they did not ask respondents experiencing price decreases to estimate the amount of those declines. 

Kaiser Family Foundation’s Annual Employer Health Benefits Survey offers a more reliable indicator of changes in small employers’ health insurance premium costs.  Reporting on the 2013 Kaiser survey, a Bloomberg headline read “employer health premiums slow for the second straight year.”  Drew Altman, the foundation’s president, said “we are in a prolonged period of moderation in premiums, which should create some breathing room for the private sector to try to reduce costs without cutting back benefits.” 

Source: Main Street Alliance analysis of Kaiser Family Foundation's Annual Employer Health Benefits Survey, 2013. Source: Main Street Alliance analysis of Kaiser Family Foundation's Annual Employer Health Benefits Survey, 2013.

Main Street Alliance analysis of the Kaiser survey data reveals that in 2013, small employers (3-199 employees) experienced the lowest price increase for family coverage ever recorded in the 15 years Kaiser has conducted the survey.  In 2013, annual premiums for covered workers with family coverage in small firms increased only 2.2 percent, compared to an average annual increase of 7.5 percent over the last 15 years. 

A lead investigator for the Kaiser study told Bloomberg that, while the health law had contributed to the 2013 slowdown in premium increases, the economy likely played a key role.  By contrast, the NFIB used the release of their study to pin the blame for premium increases, a decades-old trend, squarely on the Affordable Care Act, telling Bloomberg Businessweek that the health law was “raising costs for smaller firms.”  When pressed, NFIB researcher William Dennis conceded “how much is due just to rising costs normally and how much is due to the ACA, I couldn’t untangle that.” 

Furthermore, the NFIB study design minimizes or ignores investigation into how the law’s provisions are improving affordability for small businesses beyond premiums.  The NFIB survey did not ask all respondents who offer insurance whether they took advantage of the Affordable Care Act’s small business tax credit, which next year is worth up to 50 percent of small employers’ costs for insuring their employees.  Instead, they only asked business owners who had experienced price increases whether they had taken the tax credit “in order to pay for the increase” (Q#50).  Seventeen (17) percent of those experiencing price increases reported taking the tax credit, however the NFIB did not ask them to quantify how much the tax credit had saved their firms.  

Similarly, the NFIB did not ask whether responding small employers had received rebate checks from their insurance companies which are required when insurers fail to spend at least 80 percent of premium dollars on health care.  Insurers who violate the health law’s 80/20 rule designed to penalize insurers for wasteful spending have already been required to issue rebates worth more than $1 billion to consumers and small businesses. 

In releasing its report, NFIB hyped a narrative about rising premiums, while ignoring evidence of premium moderation and Affordable Care Act provisions that lower costs for small businesses. 


Employer Responsibility: Small businesses are not limiting growth or cutting employee hours due to the Affordable Care Act

Critics of the Affordable Care Act, including the NFIB, have frequently predicted that the law’s employer responsibility provision would lead businesses to limit the size of their firms to under 50 FTEs or to reduce employees’ hours in order to avoid employer responsibility assessments.  However, the NFIB survey struggles to find evidence that validates these claims. 

The NFIB survey specifically asked employers whether they were considering either reducing employment or reducing employee hours in response to the health care law.  Thirteen percent respondents answered affirmatively on each question.  However, in a surprisingly candid analysis, the NFIB reports that “both contraction and planned reduction in employee hours appear highly related to business profitability” rather than whether the employer would face requirements under the Affordable Care Act. 

Last month, the Wall Street Journal analyzed Department of Labor data and found “little evidence for the notion that the health law is driving a shift to part-time work.”

In struggling to find evidence of businesses contracting or reducing employment due the Affordable Care, the NFIB’s study throws cold water on their own claims. 



Buried in the NFIB’s study on the Affordable Care Act is evidence that the law is working and opponents’ doomsday predictions are unfounded.  Small employers plan to increase health insurance offering next year, breaking a decade old trend.  There is mounting evidence of premium moderation for small businesses, and the Affordable Care Act is helping lower small business health care costs through tax credits and insurance rebates.  Despite the predictions of opponents, there is little evidence that the health law is causing firms to downsize or driving a shift towards part-time work.  

The rollout of the health care law has been rocky.  Full online functionality of the health insurance marketplace has been delayed for small businesses, and the website has been mired in technical glitches.  These problems need to be fixed.  Nevertheless, the Affordable Care Act still holds enormous promise that a reformed marketplace with help small business owners access quality, affordable health care. 


[i]Sean Vitka at Slate noted NFIB’s omission of positive news in their press materials, while giving NFIB appropriate credit for publishing the results, writing “in today’s climate, we should all be happy that NFIB has the integrity to release surveys that don’t back up their own case, and honestly answer questions that undermine their political leanings—even if their PR department hasn’t gotten the memo.”  Bloomberg View columnist, Megan McArdle, meanwhile questioned whether the NFIB’s survey actually showed the results they reported, apparently not realizing that the survey results were weighted based on a stratified random sample (see methodology on page 31).