What ObamaCare Means for Small Businesses

Thu, Mar 25, 2010

Health Care, Job Creation, Waste

It’s important to look past the minutiae of the bill, and straight to the overall economics of the thing.  Let’s look past what it means for healthcare and straight to what it means for the economics of a small firm.

1.  ObamaCare means a harder economic climate for Small Businesses

At core ObamaCare is a mandate.  It is a requirement that people purchase health insurance.  This means that more dollars that were available for other purposes in the past, will now be directed to health care in the future.  Unless your small business serves the healthcare industry, these dollars are not headed your way.   Also, since nothing in the bill actually reduces heathcare and heath insurance costs, but actually increases them, an additional amount of dollars will flow into healthcare just to meet the rising costs.  These are dollars your businesses will not see from your customers because they are required to divert them elsewhere.

2. ObamaCare means higher health insurance expenses for Small Businesses

As noted above, nothing in ObamaCare reduces expenses.  The only way to reduce cost is to increase supply or decrease demand.  ObamaCare increases the demand for health care while doing nothing to increase the  supply of health care.  You will see your premiums increase if you provide healthcare to your employees or yourself.

3. ObamaCare means penalties and fines

For some small businesses, you’ll pay a penalty (fine) if you don’t provide health insurance for your employees.

4. ObamaCare means that part-time workers will become a dying breed

The penalty for not providing health care to employees is the same for part-time and full-time employees.  Since this penalty is part of the overall compensation expense for employing someone, it doesn’t make sense to employ part-timers.

While a simple analysis of the bill would lead any dispassionate analyst to conclude this, we also have empirical proof.  This approach to healthcare – the health insurance mandate – is currently being tried in Massachusetts and has failed.

None of these developments is good for business or good for job creation.  The US was headed toward bankruptcy before ObamaCare.  It’s just headed there faster, now.  The only way out is to (a) cut spending, (b) raise taxes, (c) print money, or (d) default on the debt.

It’s your guess as to which is our fate.

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Related Entry: This is Gonna Hurt: The Pain for Mandatory Health Insurance

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- who has written 71 posts on Small Business Against Big Government.

One Response to “What ObamaCare Means for Small Businesses”

  1. Ralph Says:

    The key number one issue that was not addressed is the underlying cost of medical CARE. Business will fix that problem, government cant/