Is Obamacare financially burdensome for businesses? – DEBATED
The International Franchise Association (IFA) wrote in its Sep. 2011 report "The Effects of the Patient Protection and Affordable Care Act on the Franchise Industry," available at www.franchise.org:
"Our report shows that the new health care law will have negative effects on the franchising industry's ability to grow and create much-needed jobs for the U.S. economy. We estimate that the law will negatively affect tens of thousands of franchise businesses, adding more than $6.4 billion in increased costs, not including the cost of regulatory compliance. Further, we estimate that the jobs of more than 3.2 million full-time employees in franchise businesses would be put at risk.
These effects can best be described cumulatively as anti-small business growth. The health care law unintentionally discourages franchisees from owning and operating multiple locations. The law creates a competitive disadvantage for franchisees who do own more than one or two locations. The employer mandate in the law provides an incentive for franchisors and franchisees to replace fulltime workers with part-time and temporary workers. It imposes another layer of regulatory burden on business owners as they attempt to understand and comply with the new law. It increases the cost of doing business for tens of thousands of business owners who are struggling to recover from the deepest recession since the Great Depression. The law ultimately creates barriers to entrepreneurs who are looking to capitalize on the franchise business model to grow their business."
Leonard Steinberg, MBA, Principal of Steinberg Enterprises, LLC, stated in his Apr. 18, 2012 testimony before the House Committee on Small Business, available at www.smallbusiness.house.gov:
"Regardless of how the U.S. Supreme Court rules on the constitutionality of the Affordable Care Act, many small business entrepreneurs are concerned with the new taxes and regulations that the law imposes. Some employers have expressed concerns that they may not be able to afford to keep their employees...
The proposed tax increases in the Affordable Care Act will alter the way small businesses view each expenditure and cause them to be risk averse. Businesses will stagnate since business owners will be unsure of what additional rules and regulations will be promulgated by the U.S. Secretary of Health and Human Services. This uncertainty takes money out of the worker's pockets, reduces job creation and will lead to a decline in the overall economy since there will be fewer dollars available for disposable income and less risk-taking overall."
Robert F. Graboyes, MSHA, PhD, Senior Healthcare Advisor at the National Federation of Independent Business, wrote in his Mar. 31, 2010 blog entry "Health Care Rx: Not an Ending, Only a Beginning," available at www.washingtonpost.com:
"For small business, the new health-care law begins a long struggle against cost increases, uncertainty and perverse incentives. Traditionally, small business produces over two-thirds of America's new jobs, but this bill jeopardizes that role.
Premium increases will dominate the near-term horizon... Millions of people will begin gaining insurance, with no commensurate increase in the number of doctors and other providers; this will push medical fees upwards...
Premium hikes won't be limited to small business. Based on only one of the myriad new tax provisions, AT&T, John Deere, Caterpillar, 3M, and other companies are setting aside billions of dollars for anticipated losses. They can't spend these dollars on jobs, products, and investment. Small businesses who sell to these companies will feel the secondary effects of this contraction...
Small business will fight every day to survive this bill."
The US Chamber of Commerce, wrote in its Apr. 26, 2010 white paper "Critical Employer Issues in the Patient and Protection and Affordable Care Act," available at www.uschamber.com:
"The basic premise of the law fundamentally shifts the foundation of employer-sponsored benefits in America. What has been a voluntary and flexible system will now be a one-size-fits-some landscape... Because of the mandatory nature of the law, employers may find it more difficult to offer affordable coverage, may become competitively disadvantaged, and may drop coverage altogether in an effort to stay in business."
Steny Hoyer, JD, US Representative (D-MD), stated in his Mar. 20, 2012 article "Myth Versus Fact: How the Affordable Care Act Provides Patient Protections, Lowers Health Care Costs," available at www.democraticwhip.gov:
"GOP Myth: Health care reform will hurt our economy and small businesses.
Fact: Our economy has continued to see private sector job growth, and small and large businesses are benefiting from provisions that help them provide quality, affordable health care coverage to their employees.
Since the Affordable Care Act was signed into law, the economy has created 3.5 million private sector jobs, including 488,000 jobs in the health care industry. The unemployment rate is 8.3%, lower than it was in March 2010.
360,000 small businesses have taken advantage of tax credits that are making health insurance more affordable for 2 million workers. As many as four million small businesses are eligible for these credits.
And over 2,800 employers are participating in the Early Retiree Reinsurance Program, which is helping provide coverage to 13 million early retirees who are not yet eligible for Medicare."
Jason Furman, Assistant to the President for Economic Policy and Principal Deputy Director of the National Economic Council, wrote in his June 29, 2012 article "Upholding the Affordable Care Act Is a Win for Small Businesses," available at www.whitehouse.gov:
"The Supreme Court's decision this week to uphold the Affordable Care Act is a historic win for the nation's 6 million small businesses and their 54 million employees who will see fewer administrative headaches, pay lower premiums, and receive help to make the cost of covering employees more affordable. Those who claim that the law will place new burdens on small employers misunderstand and misrepresent how it will actually work – putting small businesses on a more competitive footing with larger firms."
Matthew Yglesias, Slate Business and Economics Correspondent, wrote in his July 2, 2012 article "Should Small Businesses Really Fear Obamacare?," available at www.slate.com:
"The bill [PPACA] 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... 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' provision of the law that otherwise constitutes the biggest business burden in the legislation....
Put the special subsidies and the exemption together, and the result is a law that's pretty clearly a good deal for small businesses."
Stacey McMorrow, Research Associate, Linda J. Blumberg, Senior Fellow, and Matthew Buettgens, Senior Research Methodologist in the Health Policy Center at the Urban Institute, stated in their June 2011 report "The Effects of Health Reform on Small Businesses and Their Workers," available at www.urban.org, in June 2011:
"Despite claims to the contrary, we find the following generally positive effects of the ACA on small firms and their workers:
• Employers with fewer than 50 employees are expected to experience substantial savings on health care costs due to the benefits of the health insurance exchanges and subsidies for the smallest firms. These employers face no requirements to contribute to the health care costs of their workers under the ACA...
While each employer will face unique circumstances under health reform, our analysis finds that, in general, the smallest employers will see significant benefits from the ACA. They will be able to access more affordable coverage in the SHOP exchanges, and some will be able to use tax credits to aid in purchasing coverage. Our results show significant health care cost savings to firms with fewer than 50 workers..."