• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Obamacare: No Friend of Small Business

    Obamacare was marketed to the American people as health care reform that would expand coverage to reduce the number of uninsured.  One of the ways this would be accomplished, proponents said, was by making it easier for small business to offer insurance.  Small businesses are the backbone of the American economy and have the greatest potential to create the jobs that Americans are currently desperate for.

    Unfortunately, Obamacare will hinder the growth of these businesses. In a recent paper, Heritage’s John Ligon explains how the new health care laws will be largely ineffective at expanding coverage offered by small business, while simultaneously severely limiting job creation and growth.

    Ligon outlines the four main ways small businesses and the employees stand to lose under Obamacare:

    • Higher Premium Costs. Several provisions of the health care legislation will drive the cost of premiums upward, including heavy new federal regulations, individual and employer mandates to buy insurance, and other industry fees and taxes.  Ligon writes that this effect will be particularly pronounced “in the “fully insured” market, where 88 percent of workers and dependents at small businesses purchase health insurance.”
    • Ineffective Small Business Credit. Obamacare includes tax credits for small business, “which the Congressional Budget Office estimates will impact at most 12 percent of businesses with 25 or fewer workers and expire after two years…”  These credits are thus expected to be largely ineffective at encouraging small employers to offer coverage.
    • High Cost to Comply. “Many small companies will have to hire additional workers—and incur higher external accounting expenses—to handle not only the enhanced compliance regulations on health insurance plans but also stricter tax compliance regulations relating to business-to-business transactions.”
    • New Taxes. Obamacare increases the Medicare payroll tax for high-earners and also newly applies this tax to investment income, which will adversely affect small businesses.  Furthermore, this tax will discourage investment in economic growth.

    The new health care law does little to encourage or aid small businesses to offer insurance to their employees.  Instead, smaller employers will find it more difficult to offer the federally-defined adequate number of benefits to their employees—especially when the effects of the law on economic growth are factored in.  In order to help small business, Congress should repeal Obamacare and start over.

    Posted in Obamacare [slideshow_deploy]

    14 Responses to Obamacare: No Friend of Small Business

    1. mac says:

      Gee Whizz, Gosh Golly, could it be that the Savior lied?

    2. Lloyd Scallan - New says:

      Don't you get it yet. Obamacare will do NONE of what Obama claimed it would,

      Obamacare is not a "friend" to any American. But it's just what Obama and the Dems wants, the take-over of a major portion of our economy.

    3. Mana Texas says:

      We just attended a meeting on how to prepare for Obamacare. They are predicting that insurance rates may double. It seems like many of us will be hit no matter what we do. $2000 fine if you don't have it, but also if you don't pay high enough wages or their spouse doesn't work or they have lots of dependents and their insurance costs are higher than 9.8% of their income, they can go to the Exchange and be subsidized even if you offer them insurance ..if they do go to the Exchange, then you are penalized $3000 for each of those regardless of the $ amount they are subsidized. (Govt subsidizes them for $500 you still get fined $3000). If their costs are between 8%-9.8% of their household income then the employer has to give them a check (voucher) so they can go to the exchange and buy insurance. The amount you have to give them is the amount you would pay if they stayed with the company policy. If your cost is $300 a month and they can buy it for $200 at the exchange, they get to keep the $100 in their pocket (not return to the employer). If you have over 100 employees you can't even go to the Exchange until 2017 (SEE THE PUBLIC OPTION/ SINGLE PAYER SYSTEM COMING GUYS???) We are a landscape company and pay above the prevailing wage .. exactly how much do they want us to pay someone to push a lawn mower????? and then guess who will pay… everyone who lives in an apartment complex when our rates go up…Is there

      anyone in Washington that knows how to multiply $2000 x 150 = $300,000… sorry guys there is not that much profit in mowing lawns to be able to come up with the penalty amount… NO WONDER THEY HAD TO RAM IT THROUGH!!!!!

      P.S. We have offered through the years insurance rather than raises, but as young, healthy individuals they have always opted for the cash and to go back to Mexico where they like the doctors and they charge less when they are sick. Is that not their choice? Maybe we just say hey unless you are dying, you can't go to the emergency room without insurance. Go to the doctor and pay for it like all the rest of us. But then again… with unlimited dollar amounts, physical therapy visits, mental health visits who is going to be able to buy insurance anyway???

    4. Drew Page, IL says:

      The only "friends" Mr. Obama has are unions and those living on welfare and dependent on the government. And he is looking to increase the number of those friends with blanket amnesty, coming soon under the title IMMIGRATION REFORM.

    5. Mike Oklahoma says:

      The Foundry is just another right wing quasi news hack like Fox News. They only report on issues that fit their agenda. The fact is this law has yet to be implimented and the true impact on small businesses has had no time to see if it will hurt or help small businesses. I am not for big goverment but if we leave all things to big business we all get screwed. History is my proof.

    6. Ellen Humphrey Tulsa, Oklahoma says:

      I agree with Sarkozy of France when he said that Obama does not have the experience to run a government much less take care of foreign affairs.
      Obama’s personality (?) diplomatic persuasion(???) will sway all of the foreign countries to his desires and leadership…is another show of Obama’s arrogrance. He has found that his “Chicago brand of persuasion” does not work in his favor.

    7. Linda G, Montana says:

      Because I have 35 employees, my business is not considered a 'small business' so we won't be getting any so-called 'tax credit'. My full-time employees have high deductible health insurance now. If I have to pay for everyone to have insurance you can be sure a bunch of people will be laid off OR our product prices will be increased considerably and the consumer will pay. We may have to do both.

    8. Craig, UT says:

      Mike from Oklahoma obviously hasn't read the plan that was passed. To suggest we have to wait to determine if the plan will be costly is absurd. Read the details of the Democratic/Obama plan and there is no mystery. I'm a small business owner and I know it is going to cost more. No question. And before you bash big business, I would suggest they are providing more health care for employees than small businesses because they can afford it. Don't bite the hand that feeds you. Just ask your union friends who ALL have insurance.

    9. Ray, Hampton VA says:

      Isn't it painfully obvious the Anointed One is just plain stupid?(Except to Mike Oklahoma who's been drinking too much Koolaid.) The more we hear about Obamacare the scarier it gets. I'm a small business owner, too, and I see huge expenses trying to comply with all of this mess – from more 1099's, to penalties, to steep insurance costs, to higher wages. It just goes on and on. The Thug from Chicago is certainly showing his true Marxist colors. He intends to bankrupt this country, for sure. And, didn't we all find out in the past few days that the HHS Department ignored a report from an impartial financial reporting agency that told HHS the cost of Obamacare would be over $2 trillion? And HHS had the information a week before the vote was taken!!! How disgusting is the whole mess! We must vote in conservatives in November who will promise to repeal Obamacare or defund it or both!!!

    10. Sarah, NM says:

      Let’s not forget the new 1099 requirements. Every small business will have to submit a 1099 for all good and services over $600.00 per year, cumulatively. That’s going to be a nightmare of epic proportions.

    11. Pingback: The Core Report // White House Admits Obamacare’s Individual Mandate is a Tax

    12. Pingback: White House Admits Obamacare’s Individual Mandate is a Tax - Whitley County Patriots

    13. Domingo Garcia, La M says:

      I recently went to get fitted for a back brace for an upcoming spinal surgery that I need to have and experienced first hand the cost and bureaucratic paperwork that needs to take place to just get fitted for a back brace. The paperwork has more than tripled for the patient and for the company providing the back brace and then partial if not all of the cost is being tacked on to the patient. Most insurance companies used to cover these costs but not anymore. Looks like the cost are being passed down to the consumer.

    14. Aimee White says:

      You mean this isn't going to "Lower Health Care Costs" like Obama and Pelosi stated??

      You mean that if we like our plan, that we can't keep it?? You mean that it's going to put more burden on Small Businesses, that they promised wouldn't happen?? You mean that this will cost us more than "one thin dime", as Obama stated???

      All of the promises and BS that they gave to the public, was all lies and more lies. How could they think that adding all of those people on Insurance, while telling doctors what they could and couldn't do, was somehow going to "lower or stop the rise of healthcare"?? Only a moron or a LIAR could have said the things that Obama and Pelosi said while shoving this monstrosity legislation down our throats!

      As a business owner, I read several pages and researched the bill weeks before it was passed. Just the initial version should have made them run away, but not the demotards! There were parts of that bill that would make it impossible for small local hospitals to stay open, not to mention mandate that doctors can't own their own surgery centers!!! How is that type of dictatorship good for freedom and democracy? They were trying to make large hospitals the only source of care, and how is that going to improve efficiency let alone costs?

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×