The Daily Scoop: Should Small Businesses Really Fear Obamacare?

One of the Affordable Care Acts’ opponents ‘most repeated claims is its “job killing” nature. According to the law’s critics, it has caused widespread uncertainty for the business community throughout the US keeping them from effectively budgeting for premium costs which results in companies putting off hiring. Other claims call the law’s coverage requirements prohibitive which will cause small businesses to choose between retaining costly employee health insurance plans & eliminating coverage and just pay the cheaper penalty. Opponent are positive the burdens of the health care reform will eventually drive people out of business and kill the entrepreneurial spirit in the US.

But is any of this true?

The landmark health care case decided last week by the Supreme Court was a win for the Obama administration and a loss for the Republican Party. But the official plaintiff in the case wasn’t a Republican congressional leader or even one of the conservative attorneys general whose activism fueled the litigation. It was the National Federation of Independent Businesses, a small-business membership organization and lobbying group that strongly opposed the law.

So is defeat a disaster for small business? Almost certainly not, though it may prove to be a disaster for NFIB’s main policy priority of low taxes.
The bill in fact contains substantial benefits (some might even say giveaways) for small businesses. That starts with a program already under way to offer special subsidies to firms with fewer than 25 employees that want to offer health benefits. As long as your employees earn less than $50,000 on average (law firms, medical practices, and other elite professional partnership are thus ineligible), you can get a tax credit to defray 35 percent of the cost of the insurance if you’re a for-profit firm, and 25 percent if you’re a nonprofit. When the law really gets rolling in 2014, those subsidies rise to 50 percent for for-profits and 35 percent for nonprofits.

Firms with fewer than 50 employees are also exempt from the “employer responsibility” [mandate] provision of the law that otherwise constitutes the biggest business burden in the legislation.The Affordable Care Act (in)famously requires that all individuals who don’t receive insurance from their employer or from a government program such as Medicare or Medicaid must buy their own insurance on a regulated exchange. Subsidies will be provided to those for whom such insurance wouldn’t be affordable. That could be seen as, in effect, penalizing firms that already offer insurance to their workers. To offset this, the law stipulates that companies whose employees receive subsidies to buy exchange plans must pay a financial penalty. That is supposed to deter firms from responding to the law by simply dropping existing insurance coverage. But the ACA doesn’t make small businesses pay that penalty.

Put the special subsidies and the exemption together, and the result is a law that’s pretty clearly a good deal for small businesses.

Read more…

Additional Article:

FL Governor: Companies with “20 employees” could go “out of business” because of health care law requirements. [Pants on Fire]


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10 Comments to “The Daily Scoop: Should Small Businesses Really Fear Obamacare?”

  1. Did you send this to Speaker Boehner?

  2. Mashed, If you get a chance, drop over as I just posted my take on the ruling … and your opinion is welcome.

  3. I thing the Affordable Health Care Act is a step in the right direction, but until I live in a world where the medical treatment I get is not calculated by the effect it has on an insurance companies profits I will remain suspicious. What exactly do insurance companies do other than pool communal cash,act as pre-collection agencies for the real medical care providers, and deny payment and care while taking a cut off the top anyway? That’s right. They tell you to be very very scared because something bad might happen so pay up now.

  4. In my opinion, businesses need a solid middle-class consumer base, which is what ACA helps to provide. Too much emphasis is placed on short-term net and taxes instead of what it takes to create long-term stable demand.

    • Excellent point. By reducing the costs of health care or at least slowing the rate of cost growth, it will stabilize consumer income and thus make more available for spending, increasing demand and so forth.

  5. “The bill in fact contains substantial benefits (some might even say giveaways) for small businesses.” Bravo! Small businesses need everything they can get these days – even “giveaways” – in order to compete against the corporate giants ruling our country and economy. I miss mom and pop businesses and do everything I can to shop at them.

    • Michelle> There is so much misinformation out there, especially about how much businesses are on the hook for. If they would only read what is in the bill instead of believing what the opposition says they would have a much better grasp on the real situation. That’s why I am doing this unofficial little series on “Educating America” on the reform. I’m also working on a petition to be put up on that website the White House set up to help people get their causes heard to get our representatives to tout the benefits of the reform.

      “I miss mom and pop businesses and do everything I can to shop at them”

      I do too. That’s right, support them every chance you get.

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