Is Obamacare Bad for Small Businesses?
Matthew Yglesias in his Slate.com article believes that small businesses should embrace the Affordable Care Act, popularly known as Obamacare. He does not share the thinking of the National Federation of Independent Businesses that this health insurance law is a disaster for small businesses. He says that NFIB’s main priority is low taxes and laments the fact that the group has its priorities mixed up. The ACA provides subsidies for businesses with less than 25 or 50 employees. These range from 25 to 50% and covers both for-profit and nonprofit businesses. It also “requires that all individuals who don’t receive insurance from their employer or from a government program such as Medicare or Medicaid must buy their own insurance on a regulated exchange”.
The landmark health care case decided last week by the Supreme Court was a win for the Obama administration and a loss for the Republican Party. But the official plaintiff in the case wasn’t a Republican congressional leader or even one of the conservative attorneys general whose activism fueled the litigation. It was the National Federation of Independent Businesses, a small-business membership organization and lobbying group that strongly opposed the law.
So is defeat a disaster for? Almost certainly not, though it may prove to be a disaster for NFIB’s main policy priority of low taxes.
The bill in fact contains substantial benefits (some might even say giveaways) for small businesses. That starts with a program already under way to offer special subsidies to firms with fewer than 25 employees that want to offer health benefits. As long as your employees earn less than $50,000 on average (law firms, medical practices, and other elite professional partnership are thus ineligible), you can get a tax credit to defray 35 percent of the cost of the insurance if you’re a for-profit firm, and 25 percent if you’re a nonprofit. When the law really gets rolling in 2014, those subsidies rise to 50 percent for for-profits and 35 percent for nonprofits.
Firms with fewer than 50 employees are also exempt from the “employer responsibility” provision of the law that otherwise constitutes the biggest business burden in the legislation.The Affordable Care Act (in)famously requires that all individuals who don’t receive insurance from their employer or from a government program such as Medicare or Medicaid must buy their own insurance on a regulated exchange. Subsidies will be provided to those for whom such insurance wouldn’t be affordable. That could be seen as, in effect, penalizing firms that already offer insurance to their workers. To offset this, the law stipulates that companies whose employees receive subsidies to buy exchange plans must pay a financial penalty. That is supposed to deter firms from responding to the law by simply dropping existing insurance coverage. But the ACA doesn’t make small businesses pay that penalty. …
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