Health-care Reform and the Affordable Care Act Impacts Small Business
Kenneth Wisnefski, July 12, 2012
The United States Supreme Court largely upheld the Affordable Care Act in a 5 to 4 decision. The bill marks a major victory for the Obama administration and will have a major impact on small business owners that own and operate U.S. based companies.
There are two main ways that the bill will leave its mark. First, small business owners that currently offer health-care to their workers can reduce their costs by an estimated 5 to 10 percent on average. There are even tax incentives for companies that offer health-care coverage to their workers. On the other hand, however, some small business owners that employ closer to 100 workers may choose to not offer coverage to their personnel as the taxes they will pay in penalties are actually cheaper than offering benefits. The worker then needs to find coverage on their own as stipulated by the individual mandate.
This is an ongoing debate that has governing officials and small business owners weighing their options.
It is hard for companies to balance costs with taking care of their employees. Statistics gathered from healthcare.gov, a federal government website managed by the U.S. Department of Health and Human Service, indicates 33% of the 13 million uninsured Americans work for firms with less than 100 personnel. With the dramatic rise in healthcare costs, it has become challenging for Entrepreneurs and small business owners to offer these benefits to their workers.
As the Obama Administration has marked this a pivotal win in an election year, entrepreneurs and small business owners alike will have to make equally tough decisions as members of the Supreme Court made during yesterday’s ruling. Small business owners must decide whether to offer health-care coverage or pay the taxes which may be less expensive.
Up to this point, there has not been enough done to support small business initiatives with taking care of workers. For example, the health-care law did not require small business owners of a certain size to offer coverage. Republicans are calling for an appeal to the law, including Republican Presidential hopeful Mitt Romney, who stated if elected President, his first day in office he will appeal the law.
From 2000 to 2007, the percentage of small businesses offering health-care coverage and related benefits fell from 68% to 59% as indicated by healthreform.gov. During the same time period, health-care costs rose dramatically. In fact, most small business owners state the reason they choose not to offer health-care to their workers is due to the rising cost in premiums.
It seems clear that until the rising costs are addressed, the problem cannot be solved; then enters the debate of “doing the right thing”. That is, offering your employees coverage and thus increasing your costs, or savings and continuing to reinvest in the company.