National Small Business Organization Joins Lawsuit Against Obamacare

Published May 31, 2016

The National Federation of Independent Business (NFIB)—the nation’s largest small-business advocacy organization—has joined the ranks of twenty state attorneys general in a lawsuit attacking the constitutionality of President Obama’s new healthcare law.

The May 14 announcement came on the heels of repeated calls from NFIB members nationwide to challenge Obamacare in court, according to Elizabeth Milito, senior executive counsel for the NFIB Small Business Legal Center in Washington, DC. Milito said the lawsuit charges the new healthcare law directly undermines the organization’s mission, which is to promote and protect the rights of small business owners to “own, operate, and grow their business.”

“NFIB worked diligently throughout the legislative process to try to shape and improve the healthcare bill as it was being debated,” Milito said. “When we felt the legislation had reached a point that was unacceptable to our members and us, we were vehemently opposed to the bill and worked to defeat it.”


‘This Unconstitutional Law’

There are many provisions in what she called “this unconstitutional law” that will devastate small business, Milito said, noting the lawsuit’s two main legal claims relate to the “unconstitutionality” of the individual mandate.

“We do not believe the commerce clause of the U.S. Constitution gives Congress the authority to regulate inactivity,” Milito said. “Requiring every individual to purchase health insurance or face a fine is an unprecedented and unconstitutional act of Congress. Requiring NFIB members to obtain and maintain health coverage deprives our members of their liberty and property interests without the due process of law.”

John Graham, director of health care studies at the California-based Pacific Research Institute, agrees.

“By allowing the federal government to define ‘coverage’, Obamacare reduces individuals’ and businesses’ freedom to decide what they want in a health-insurance policy and how much of their health dollars they’d prefer to spend on medical care, which is under their own control,” Graham said.


‘Unaffordable’ Provisions

According to NFIB analysis, three additional provisions in the Obamacare law are simply “unaffordable,” Milito said.

The first is the small business tax credits. Milito said this step will do little to make insurance more affordable for small businesses. According to Amanda Austin, director of federal public policy for NFIB, although employers can apply for the credit, few owners will qualify for the full credit.

“We’re still unsure how many people are going to be able to access this credit,” Austin said. “The small business tax credit was a big talking point for why this bill should be passed. A tax credit could certainly offset the amount employers are paying, but the key word there is offset—we want the market to drive costs down long-term, with a competitive market, not having to go back to Congress every year for more offsets.”

Second, the “corporate reporting” 1099 requirement, which Milito notes places a large tax-filing burden on all small business owners, will ultimately cost business owners heavily as they take the necessary steps to comply with the new filing requirements.

Third, she said, the “health insurance fee” is really a tax structured as an annual fee on insurers, which will just pass on new costs to small businesses and ultimately to customers.

“For small businesses, healthcare reform has always been about costs—reducing them. But the only thing this law does is drive costs higher,” said Milito. “It will raise, not lower, insurance costs, and it will increase both taxes and the cost of doing business for the very people who wanted help—small business.”

Avoiding ‘Deadly Cost’

According to the NFIB, small firms represent 99.7 percent of all employment in the nation. That’s why NFIB’s involvement is so vital, Graham says.

“NFIB’s participation in the lawsuit is very important because it shows that it is not just a political stunt by states’ attorneys’ general but a real effort by businesses to avoid the deadly cost of Obamacare,” Graham said.

Elisha Maldonado ([email protected]) writes from Wyoming.


Internet Info

NFIB: Healthcare Reform Law—Implementation Timeline for Small Business (PDF and Video):