US Chamber of Commerce Survey finds small business against Obamacare

Despite the administration's controversial decision to delay forcing companies to join Obamacare for a year, three-quarters of small businesses are still making plans to duck the costly law by firing workers, reducing hours of full-time staff, or shift many to part-time, according to a sobering survey released by the US Chamber of Commerce.

"Small businesses expect the requirement to negatively impact their employees. Twenty-seven percent say they will cut hours to reduce full time employees, 24% will reduce hiring, and 23% plan to replace full time employees with part-time workers to avoid triggering the mandate," said the Chamber business survey provided to Secrets.

Under Obamacare, just 30 hours — not the nationally recognized 40 hours —is considered full-time. Companies with 50 full-time workers or more are required to provide health care, or pay a fine.

The administration recently decided to wait a year before businesses had to comply, but many are trying to get ready anyway. The president did not delay the mandate that Americans must have health insurance or pay a fine, however.

The Chamber's second quarter small business survey found that just 30% are ready for the law and even understand what is required.

Dealing with Obamacare is the biggest worry of small businesses and comes as they continue to see a sluggish economy which has already put a brake on their hiring. Just 17% reported adding employees in the past two years. And only one-in-five small business owners believe that they will add employees in the next two years.

The Chamber added that "nearly one-in-four employers say the health care bill is their biggest obstacle to hiring more employees."

Other key findings from the Chamber Survey:

—77 % continue to think the American economy is on the wrong track. However, small businesses are more optimistic about their local economy and individual business.

—The majority (61 %) of small businesses do not have plans to hire next year.

—Concerns about regulation have increased significantly from 35% last quarter to 42% now.

Small businesses are looking for leadership on issues that will remove barriers and encourage growth.

—88% of all small businesses support addressing entitlement spending to resolve America's growing financial challenges and escalating debt.

—83% support congressional efforts to reform the tax code — with the majority focusing on making it less complex.

—81% of small businesses surveyed believe the immigration system is broken and needs to be reformed.

—In contrast to the president's recent speech pushing new energy regulations, 90% of small businesses support easing EPA regulations and opening up more federal lands for drilling.

How will Obamacare impact small businesses?

Just how will Obamacare impact small businesses? We have heard all kinds of stories from both sides of the table. Republicans and Democrats all have their own take on Obamacare.

At the recent International Franchise Association convention held in Washington this week we got some ideas from the small business owners that will be directly impacted. That's where Atlanta Taco Bell and Kentucky Fried Chicken franchiser David Barr pulled out his powerpoint showing how funding Obamacare will cut his profits in half overnight.

With simple math the small business folks understood, he spelled out that their only choice is to slash employee hours so they aren't eligible for company-paid health care or stop offering insurance and pay the $2,000 per employee fine. Barr has 23 stores with 421 employees, 109 of whom are full-time. Of those, he provides 30 with health insurance.

Barr said he pays 81% of their Blue Cross Blue Shield policy, or $4,073 of $5,028 for individuals, more for families, for a total bill of $129,000 a year. Employees pay $995. Under Obamacare, however, he will have to provide health insurance for all 109 full-time workers, a cost of $444,000, or two and half times more than his current costs. That $315,000 increase is equal to just over half his annual profit, after expenses, or 1.5% of sales.

As a result, he said, "I'm not paying $444,000." Providing no insurance would result in a federal fine of $158,000, $29,000 more than he now spends but the lowest cost possible under the Obamacare law. So he now views that as his cap and he'll either cut worker hours or replace them with machines to get his costs down or dump them on the public health exchange and pay the fine.

"Every business has a way to eliminate jobs," he said, "but that's not good for them or me." But that's not all. His experience tells him that most low-wage workers he would have to cover under Obamacare won't take it because their $995 share is too high, meaning those the program was set up for won't see any benefit. And those who do will because they have major health issues, likely resulting in higher premiums to him.

This will be the norm throughout the United States. Every business owner will have to deal with the same issues. The result will not be pretty at all.

Check out the latest from the Investor Business Daily Obamacare List