A wave of higher health insurance expenses will threaten the bottom lines of many small and medium-sized businesses -- including restaurants and hotels -- starting next year under the Affordable Care Act. And if S.C. leaders turn down expanding Medicaid, as expected, the wave will be even bigger.
Those business owners could face fines of up to $2,000 per full-time employee if the state refuses to expand Medicaid.
"Restaurants ought to be out there championing Medicaid expansion," said Frank Knapp, chief executive of the S.C. Small Business Chamber of Commerce. "They ought to be beating down (Gov. Nikki Haley's) door and saying, 'Please expand Medicaid.' Anybody in the service industry should be."
For many service-industry businesses, however, planning ahead to meet a confusing, and still changing, set of regulations is a daunting task.
"There are so many regulations that haven't come down from the feds that we're still flying by the seat of our pants on this," said Ben Homeyer, state director of the National Federation of Independent Businesses.
Homeyer's group fought against the Affordable Care Act, filing a lawsuit that was among those that led to last year's Supreme Court decision that the law is constitutional.
The Supreme Court left it up to the states whether to expand Medicaid coverage to include any adult earning less than 138 percent of the federal poverty level. That is about $15,000 a year for an individual or $31,000 for a family of four. Many entry-level workers in service-related industries, including restaurants and hotels, would be included in that coverage.
However, Haley and many Republican legislators want the state to opt out of expansion, saying Medicaid is wasteful and mismanaged, and the Affordable Care Act is financially unsustainable. Leaders in 17 other states have indicated they plan to turn down the expansion, too.
But there's a catch: Turning down expansion could hurt many businesses because of another provision in the act.
In 2014, all businesses with more than 50 full-time employees will be required to offer their workers affordable health insurance. And there's a large fine -- $2,000 per worker over a 30-employee threshold -- if a company doesn't offer affordable health insurance. But assuming they offer affordable health care to all of their employees, employers wouldn't be penalized if their low-wage employees decide to go instead with Medicaid coverage.