Obamacare - Making Business Think Small

Obamacare – Making Business Think Small

The View from the Middle

Since Obamacare was passed I’ve wanted desperately to understand what was in it, but struggled with how to do that.  Should I read the almost 3,000 page bill, and would I even be able to understand what was in it once I did.  Even Nancy Pelosi famously said, “We have to pass the bill so that we can find out what’s in it.”  If she didn’t totally understand it after she read it (I’ll give her the benefit of the doubt), what chance would I have?  It would take me weeks and I would be no better off.

So, I decided to talk to a small businessman, and friend, who has already had to work within its regulations and would have to comply with future rules as they come into effect.  What I found was that there are many regulations that will challenge small business owners and there is one huge unintended consequence we should all understand.  But first let me tell you about the entrepreneur that I interviewed.

His company employs well over the 50 full time people that will require him to provide insurance or be fined.  They also employ hundreds of part-time employees.  They currently offer insurance to their full time employees, but do not for their part-timers.  Currently everyone in the company is happy with this set up and just likes the idea of having a job. 

My friend indicated that there are plenty of intended consequences in this 2,700 page bill, containing 4,000 new regulations requiring 13,000 pages of supporting documentation.  There are taxes, fines and penalties galore designed to make sure that each employer and employee jumps through their respective hoops as they comply with this new law.  There are also thousands of unintended consequences that will dribble out over the next few years, but there is one crippling unintended consequence that my friend pointed out to me.  This law is going to make businesses across the US think small.

Let me give you some examples.  If you are a business that employs slightly over the 50 full time employees that puts you under the Obamacare microscope, you are going to try to figure out how to reduce your employees to get under that level.  If your company is over the 200-employee threshold for the act’s “auto enrollment” provision, you will be trying to get under that limit. 

Almost all companies in the retailing and restaurant businesses will be looking hard at reducing the hours of their part time workers. Typically, these industries do not offer health care insurance for these workers.  These jobs are often occupied by a secondary household income earner who is still being covered by another family member’s policy.  The workers are happy to have the income and the companies recognize savings, which they can pass on to their customers in the form of lower prices.  Everybody benefits.  Under Obamacare, part-time hours are accumulated to calculate their “full time equivalents” which then make them subject to mandatory coverage.

All of these rules, regulations, fines, taxes, etc. are causing employers to think small as they make their plans for the future.  This is not what made America great and it is not what we need right now. 

What we need is the America that encourages employers to think big!  We need American businesses that are willing to take risks and are trying to expand their enterprises in order to (heaven forbid) make more profit.  If you are an entrepreneur, no matter how large your business is, you are already being forced to deal with these realities.  If you work for one of these companies you are about to pay a price for this government intrusion.  You may not connect the dots between your layoff or reduced hours and Obamacare, but the connection is direct and unavoidable. 

There is a final insult that workers should be prepared for.  Many employers, even well intentioned, may find that buying insurance for their employees and dealing with the spider’s web of regulations is just too difficult and will default to paying the fine / tax.  This will mean that each worker would also have to pay a fine or buy insurance on his or her own or sign up for one of the government’s insurance exchanges. 

The final chapter of Obamacare could go something like this.  Huge numbers of people are forced into the exchanges.  Insurance companies will not be able to compete with government-subsidized plans and we end up with a single payer system.  Or was that the plan from the beginning?