This weekend marks the third anniversary of Obama’s signature achievement, the healthcare bill named the “Affordable Care Act,” better known as Obamacare. At the time of the bill’s passage the New York Times called it an “attack on wealth inequality,” and unsurprisingly the paper was full-throated in its support of the president and his agenda. Now that the bill is safely passed and its namesake has been reelected, the Times small business section has come to a shocking realization: Obamacare is going to very seriously, and very negatively, impact small businesses. In two separate stories on their homepage the picture is clear: business owners are facing tough decisions regarding their compliance and most of the possible scenarios will end up hurting the employees that the healthcare law was supposed to be protecting.
Yesterday the Times published a profile of a small business looking at the possibility of losing half of its profits due to requirements in the new healthcare law. The bakery’s owners are mulling their options trying to decide how to best comply with the law while still turning a profit. The options they’re deciding between are being discussed at businesses across the U.S.:
Option One is to provide the insurance. According to the law, Ms. Shein will have to offer health insurance or, most likely, pay a penalty, and she estimates the insurance will cost up to $108,000 a year for 90 employees (managers have insurance already).
This is just an estimate, she said, because the insurance companies have not yet created and set a price on plans that meet the law’s requirement for minimum care.
Option Two is to not offer health insurance and let employees find coverage elsewhere, perhaps on one of the new government exchanges. Under this option, the company will probably have to pay the mandated “employer shared responsibility payment” to the government.
The cost to the business would be $2,000 per employee a year, but the law exempts the first 30 employees, so the total would be $130,000 per year for a 95-person company. One benefit of this option is that the company would not have to take on the burden or expense of managing the insurance plan, which Ms. Shein estimates would take $10,000 of staff time.
One way to cover the costs associated with the new law would be to raise the price of each item sold about 4 percent and pass the costs along to buyers. “It’s ironic that our success meant we could grow,” Ms. Shein said, “and now we will be competing against smaller companies, with 50 employees or fewer, who will be able to charge less per item because they don’t have the financial burden of health insurance.” Prices are currently similar among local competitors, Ms. Shein said, and she says she believes the increase in her prices could affect her sales, possibly significantly.
Ms. Shein is considering a third option: outsourcing certain jobs to reduce the staff, because businesses with 50 or fewer employees will be exempt from the penalty. “We can outsource the cleaning and make the drivers independent contractors,” she said, “and we can cut the least profitable delivery routes, least profitable accounts or reduce the variety of items we create.”
No matter what option is chosen, the profits of the bakery, which ultimately serve to help the business operate and expand, will suffer. Options one and two could endanger the business’s viability, and thus the livelihoods of its employees and owners. Option three would put many of the bakery’s employees out of a job, thanks directly to a law that was touted as a way to protect low-income earners. No matter what these small business owners decide, the jobs of their employees are at risk. Not exactly the picture that the Times painted three years ago while covering the healthcare bill.
The second story, published in late November but still featured on the small business section’s homepage is a profile of several small business owners, including Robert Mayfield of Texas who has decided to hold off expanding his business because he is “scared to death” of the new healthcare law and its possible impact on his bottom line. In the same story, the Times reports:
Many who oppose the requirement say the cost of providing health insurance could mean hiring fewer workers. “Any dollar that gets diverted, whether it’s through Obamacare or increased tax rates, puts franchisees one dollar further away from being able to expand their businesses,” said Don Fox, chief executive of Firehouse Subs, a fast-growing chain of 559 restaurants based in Jacksonville, Fla.
Funnily enough the Washington Post has also come to this shocking realization. Today they published an interview with a cafe owner in Alexandria about his reluctance to expand his business due to the uncertainty still surrounding the healthcare law, its regulations and his compliance with it:
“These changes are less than a year away, and I still have no information about how much our premiums are going to cost,” said Manor, owner of Bittersweet Catering, Cafe and Bakery. “It definitely gives me pause when thinking about adding another location.”
Last week I discussed how another mainstream outlet, the Associated Press, had also come to discover the flaws in the healthcare law three years after its passage. During the debates about the bill, Nancy Pelosi warned that we would have to ”pass the bill so you can find out what is in it.” It seems the mainstream media were also operating under that impression–that the bill would have to be passed before it could be accurately reported on.