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:
"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 Detroit News stated the following in a Sep. 18, 2013 editorial article titled "Obamacare Hurts Michigan Businesses," available at detroitnews.com:
"Kalamazoo-based, medical-products maker Stryker Corp. says Obamacare's 2.3 percent medical device tax will cost the company $100 million this year, reducing its research and development budget by over 20 percent — meaning a loss of 1,000 workers. The Fortune 500 company is just one of many Michigan employers being negatively impacted, making the state a witness to the national economic harm that Obamacare has wrought..."
Michael F. Cannon, MA, JM, Director of Health Policy Studies at the Cato Institute, stated the following in his Aug. 17, 2010 article titled "ObamaCare: The Burden on Small Business," available at cato.org:
"These mandates are a double-whammy for our small-business owner. He already faces some of the highest premiums out there. Yet he also provides some of the least comprehensive health plans. So his premiums will rise more than larger employers' premiums will...
If our small-business owner has 50 or more employees — or fewer full-time employees and lots of part-timers — he faces the prospect of tens of thousands of dollars in penalties under ObamaCare's employer mandate if he does not provide 'adequate' coverage to his workers.
The worst part is that these penalties will be triggered by factors that are unpredictable, unobservable, and totally beyond the control of our small-business owner."
The US Chamber of Commerce wrote the following 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."
Gene Marks, columnist, author, and small business owner, stated the following in his Mar. 21, 2012 article titled "Why Healthcare Reform Is Great (And Terrible) For Small Business," available at huffingtonpost.com:
"...[I]f you have less than fifty employees (like I do) than you're exempt from the law. You don't have to do anything. You can have a health insurance plan. Or you don't have to have a health insurance plan. It's completely up to you...
And what if you have more than fifty employees? Well, you're required to have a health insurance plan. If you don't than you have to eventually pay a fine/fee/penalty ... tax of $2,000 per employee. That sounds like a lot. But it's actually not as much as you think. When you dig down in the calculation, you'll see that the first 30 employees are exempt from the tax. And then when you compare the tax to what you're probably now paying for health insurance (which averages between $8,000-$11,000 per employee according to some studies), you may find that not carrying insurance and just paying the tax is way less expensive than carrying the insurance...
Because we're promised lower insurance rates and a state-run competitive exchange of products we may also find ourselves avoiding that annual anxiety attack when we're told how much our rates are going up that year. Theoretically, health insurance, previous subject to 15-20% annual increases, should now be more under control and easier to budget. At least that's what we're told. And that's another great thing for small businesses."
Joan McCarter, Senior Political Writer for Daily Kos, wrote the following in her Dec. 9, 2012 article titled "What Obamacare Means for Businesses: Facts vs. Fiction," available at dailykos.com:
"...[B]ecause of a lack of good public education about the Affordable Care Act from the administration and supportive members of Congress, other business owners, especially small business owners, are left with the idea that maybe this Obamacare is just going to be too expensive and too burdensome. That's a big problem, especially for employees of small businesses. Because for those businesses there are some pretty good deals.
The smallest employers are not only exempt from any potential fine for not providing insurance, if they do or want to provide insurance to employees, they can get tax credits to help do that. That's in effect now for companies with few than 25 employees and wages below $50,000 each. If they offer insurance and pay at least half the premiums, they can receive a tax credit of up to 35 percent of their contributions. After 2014, the tax credit goes up to 50 percent if the business buys coverage through the insurance exchange. Companies that have up to 50 employees and who do not provide health care benefits are not subject to any fines for not providing that coverage. Their employees will be able to get their coverage in the health exchanges the law creates starting in 2014.
Here's one of the greatest things for small business owners: they can afford health insurance for themselves!"