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  • Happy Birthday, Obamacare? What It Really Means for American Businesses

    This Wednesday marks the first anniversary of Obamacare. While advocates spend the week highlighting the new law’s effects on different groups of Americans, we will do the same. A review of the facts on the ground and the conclusions of Heritage research over the past year reveal the far-reaching negative consequences of the new law.

    Today, the argument is that Obamacare is good for American business. Though there are sure to be those who experience some benefit under the new law, its overall effect will be to cause great harm to job growth and the economy at large. By and large, Obamacare will also fail to remove the obstacles that smaller employers face to provide health insurance for workers.

    For starters, Obamacare creates burdensome new paperwork for business owners through its requirement that they file a 1099 form with the Internal Revenue Service for all purchases above $600. Though there is bipartisan support to repeal this onerous requirement, it remains part of the law. Altogether, Obamacare includes more than $500 billion in new taxes, which, as Heritage analyst Curtis Dubay writes, “will slow economic growth, reduce employment, and suppress wages. These economy-slowing policies could not come at a worse time. [Obamacare] tax increases will impede an already staggering recovery.”

    Obamacare also creates penalties for firms with more than 50 workers that do not provide employees with a level of health coverage deemed adequate by Washington. This discourages small businesses from expanding. As Heritage analyst Brian Blase writes, “The economic effects of the employer mandate will likely be lower profits for many businesses, lower wages for millions of workers, increased unemployment, and higher prices for many goods and services.” Since employers will be required to increase the amount they compensate workers in the form of benefits, they will reduce the amount of compensation they provide as wages, since, after all, “Productivity gains, not acts of Congress, are required to increase worker compensation over time.”

    Moreover, Blase writes, “businesses that conform to the mandate will face compliance costs. Therefore, many businesses will have less profit with which to compensate their employees and shareholders, resulting in lower wages for employees and diminished portfolios for shareholders.” To make up for cost increases, businesses will likely increase prices for goods and services.

    Finally, though Obamacare is touted as helping small businesses to afford coverage for employees, its new small business tax credit actually makes little leeway to accomplish this goal. The Congressional Budget Office estimates that “a relatively small share (about 12 percent) of people with coverage in the small group market would benefit from that credit in 2016. For those people, the cost of insurance under the proposal would be about 8 percent to 11 percent lower, on average, compared with that cost under current law.”

    The tax credit will be largely ineffective due to the narrow criteria businesses must meet to qualify. The credit would offset, at most, 35 percent of insurance costs, but it is phased out as the number of employees or average wage rises. Both of these phase-outs occur simultaneously, quickly diminishing the value of the credit. According to Bill Rhys, tax counsel for the National Federation of Independent Business, “The fact is neither this law, nor this credit, will make healthcare more affordable for small businesses long-term.”

    Heritage’s Center for Data Analysis simulated the overall effects of the new law on the economy and found that Obamacare would result in reduced investment in the U.S. economy and a loss of 670,000 job opportunities every year. While liberals try to sell the ever-unpopular Obamacare to the American people, a look at the bigger picture reveals that, no matter how you slice it, the new health care law is an economic disaster. To read more, check out the following Heritage documents:

    Obamacare: Impact on the Economy

    Obamacare and New Taxes: Destroying Jobs and the Economy

    Obamacare and the Employer Mandate: Cutting Jobs and Wages

    Obamacare and Health Subsidies: Expanding Perverse Incentives for Employers and Employees

    Posted in Obamacare [slideshow_deploy]

    5 Responses to Happy Birthday, Obamacare? What It Really Means for American Businesses

    1. Jerry DiFabrizio says:

      So you think the Affordable Health Care Act will hurt business and kill jobs. (It won't) What do you propose in its place?

      I'll tell you what I favor. A single-payer system with a tax credit for those who buy their own private insurance. How to pay for it? Tax the things that cause bad health. Alcohol, tobacco & firearms, sugar, corn and refined foods. Maybe gas too to encourage people to walk more.

      What do you think.

    2. Pingback: Happy Birthday, Obamacare? What It Really Means for American Businesses | Big Propaganda

    3. George Colgrove VA says:

      Though all the above is true and will negatively (has negatively) effected business, it is not only ObamaCare that is doing it. There are thousands of laws that make owning a business difficult. Our National Debt will be a huge factor when we start paying that back (a loss of a potential of $1 trillion a year out of our GDP – it has to happen sometime! Only going to get worse every year we push it off!)

      If we want to get this Nation back on its feet we need business (the good, the bad, and the ugly) to run free and clear of the feds. The scope of a criminal company is limited. Even more limited when compared to the criminal behavior going on in the federal workforce. A single body called the United States Federal Government employed by 2.7 million overpaid self serving and self centered federal workers have single handedly plunged this country into a debt equaling and soon to exceed our GDP! A debt that if we were told we need to pay back today, there would not be enough wealth ON THE PLANET to do so.

      This crime against humanity will affect every American – not just a few investors in a single company. We have survived the fall of criminal companies, though the stories of individuals who lost big are tragic. When nations do what our congress and the greedy federal workers are doing, they simply fail, yielding to tyrants. History is full of nations who have fallen to massive debts, nearly permanent wars and overreaching benefits.

      We need not fear a single criminal company anymore for the total loss to America in corrupt companies between 1990 to now pale to the one time largest monthly increase of our National Debt committed by the self-serving feds of $223 billion just a month ago. And practically matches the total federal workforce grab of $74 billion in just one day last week!

      The government is NOT the center of good ideas, nor should it be trusted with serious matters of our individual health. The feds are in an out of control spending spree started by false evaluations and false assumptions (deception) of the federal response to the tragedy of 9/11. The FEDS CANNOT DO SOMETHING AS SIMPLE AS BALANCING A CHECKBOOK!! They have forced our great grandchildren to pay for their excessiveness of today. Their greed and selfishness HAS ROBBED people yet to be born! These people cannot see beyond their personal drive for their own privilege and wealth to see that one day the money we spend today would be needed a thousand times more a decade or more in the future. These examples of federal ignoramus set in their seats of self-perceived power spending money that IS NEEDED 35 year from now! And we are supposed to trust the feds to take care of our health?

      Yes, we need not only kill ObamaCare , but also the rest of the regulations, taxes and financial reporting requirements of the federal government. Moreover we need to get DC under a small and tight budget – one that allows us to start retributions for the future generations we are robbing from. What is closing these businesses is the entire federal government – not just some massive diabolical health care program.

      • Lola in Watertown SD says:

        I could not agree with you more!!!! You are Right On! … and as a small business owner, I know exactly what you are talking about!!

    4. Bobbie says:

      i totally disagree with you, Jerry. The so called affordable health care act has already destroyed jobs and effected businesses, already increased costs to those that pay their way, all because of government driven uncertainty. How can you favor that? First off it's highly unconstitutional. I don't favor single payer with a rebate check to those that cover their own! Why the burden?

      Private insurance companies are held accountable to their business. This is another area the actions of government cleared a path for government of no accountabilities to take over.

      Why would you want GOVERNMENT collecting money for insurance and money for medical costs and money for GOVERNMENT'S PART IN IT, when it can be done without this corrupt middleman and it's costs? Insurance-insurer doctor-patient-insured. Why do you want GOVERNMENT INVOLVED?

      If everyone were held accountable to their own personal responsibilities of existence, there would be alot more balance without government intrusion or influence or coercion.

      Oversight could be in the private sector since government proved their failure of their duty of overseeing the private insurance companies causing this delusional crisis.

      Control would remain with the individual, where it never should've left. But the coercion of authority gives comfort to those that fall into it. We need honest people with integrity in the positions of government where it isn't and we need our freedoms and liberties protected not taken away because 30 million people want to be the burden on America's values and society. People have to pull up their own pants or go to a country where they don't have to.

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