The effects of Obamacare on small business. Hmmm. A stickler for English composition, it pains me to begin an editorial article with a fragmented sentence. Nor did I really think a productive next thought would be “Hmmmm.” Much to my chagrin, though, these things have now happened, and much like the passing of the new health care bill into law, I cannot undo them. For this, I’ll simply move on to the immediate question at hand.
Which… exactly… are the elements with which we, the small business owners and self-employed, should most be concerned? In the very least, what are the elements of the bill over which we should be demanding more clarification (so much for the promised transparency)… and then wondering about? Again, it comes to mind: Hmmm. Well, as murky as the waters are…. Let’s dive in and taker a look, shall we? It’s probably best if we all keep our eyes open once inside.
Higher Labor Costs
If health insurance is now required for all business employing above X number of employees, then a rise in costs for that small business is little more than a deduction by way of simple math. Indeed, the equation, as simple as it may seem, can produce potentially crushing numbers as a result.
A small business may find itself experiencing growth- a result of great luck, timing, sharp acumen or a combination of any or all of the three. Either way, it’s weathering the tumultuous economy and slowly climbing upward and outward. Still treading carefully, our company realizes that, in order to keep up with growth comes the need to expand the work force. Suddenly our small business finds itself employing the minimum number of employees (as designated by the health care law) required to receive an offer of health insurance on the part of the employer.
If this were a cinematic comedy, this would be the point where an abbreviated story line would state: mayhem and shenanigans ensue. Unfortunately, carrying much more somber tones, this business is the livelihood of a small business owner and the few people who helped build the company.
And now our small business has some choices.
Do not increase the work force, avoiding government mandates, but also restricting or possibly even eliminating the ability to sustain growth.
Increase the work force. Along with increased payroll expenses, prepare for expenses related to additional tax procedure, compliance procedure and, of course, the actual costs of the newly required insurance. Hope that promised tax breaks compensate for negation of profits and possible losses.
Tragically, the best choice is sometimes the lesser of two evils. A question I firmly believe we need to be asking is: Is this where millions of small businesses are headed?
Costs for Existing Health Care
With respect to just how existing health care costs will be affected under Obamacare, the debate is far from over. Supporters will stand by the law, stating that, over a period of time, costs will lower. Opponents to the bill express concern over insurance costing more out of basic necessity. The costs of providing insurance for 25-35 million additional people must raise existing premiums. (Disclaimer: I am not an economist by education or trade. However, I hesitate to submit that such a title would be required to grasp that, when there are new costs where there were once none, said costs will require payment at some point in the future. At least, I think that’s how it works.)
Will a business owner with a conscience consider that his or her newly grown work force needs increased earnings in order to pay for the insurance they’re now required to purchase? If so, be sure to add “increased payroll” to the list of expenses for a business providing insurance. If not, a small business chances losing employees to another company that will, in fact, offer higher pay.
The Cost of Hiring the “Insurance Police”
Keeping on the track of health care bills (Oops… I mean “laws”), costs and consequences, allow me to touch lightly and briefly upon one element of the new law, wherein the Internal Revenue Service has been assigned to “enforce” compliance by way of “taxes” levied against those who are not compliant. I can’t begin to express how disturbing this is, and just how murky the waters become here, but let’s do keep this civil, and solely about finances.
With a forecast of 17,000 new positions needed to undertake this new assignment, the IRS is on track to spend 5 billion dollars per year in operating expenses. It should be noted that nowhere in this health care bill is this 5 billion dollars allocated for our new health care police. Nor does anyone seem to have a solid explanation as to from just where these funds are supposed to come.
Oddly, I just found myself back at “Hmmmm”. And back at my fragmented thought: The effects of Obamacare on small business. Sadly, this phrase comes to me as a stand alone thought simply because, with so little transparency, so many hidden and unpublicized agendas contained within the law, and such a divided opinion… it’s simply not easy to apply the phrase to a quasi-complete, somewhat thought-out opinion. Oh wait. Is that what I just did here?