Acknowledging business frustration with the complexities of the Affordable Care Act, the Obama administration has suspended until 2015 the laws mandate that companies provide health insurance for employees or face a penalty. The government should take a hard look at the mandates troubling consequences.
A Gallup poll of small business released last month found a staggering 38 percent of small business owners said they have pulled back on their plans to grow their business because of Obamacare. The act has already done severe damage to Americas economic recovery and delaying it until 2015 will serve as a continued drag on job growth.
Suspending the business mandate gives Washington a chance to reassess the unpopular health law and refocus on consumer choice. By building a top-down, one-size-fits-all government-run system, Washington has robbed employers of needed flexibility in how to cover employees across diverse industries.
The presidents new health care law is very complicated, Michigan Chamber of Commerce President Richard Studley told The Detroit News in applauding the mandates delay, even as he warned its problems wont go away. A lot of small- and medium-sized businesses dont have the (staff) to deal with the complexity behind it.
Under Obamacare, companies with 50 or more full-time employees (defined as working at least 30 hours a week) must offer health coverage or face a fine of $2,000 per worker. The law has created havoc in the workplace as employers have had to hire consultants, reassess business models and determine if they are better off paying the penalty and dumping workers into state health exchanges.
The Gallup poll of 600 small companies under $20 million found 41 percent have frozen hiring due to Obamacare. Nearly 20 percent said that the law had directly reduced the number of employees you have in your business.
The poll came as the Commerce Department revised first quarter growth numbers downwards to a tepid 1.8 percent from 2.4 percent. No wonder. Small businesses account for 64 percent of new hires according to the National Federation of Independent Business, and Obamacare is choking that job engine.
We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didnt realize the extent they were concerned, said attorney Steven Friedman who advises businesses on employment law, and who commissioned the poll.
In Michigan, restaurant and grocery chains employing large numbers of low-wage earners are particularly vulnerable. Ken Adams, who owns 10 Subway franchises in the state employing 60 full-time employees told The Wall Street Journal he plans to cut their hours below 30, or eliminate positions altogether, because of Obamacares mandate.
Whole Foods CEO John Mackey, who just opened a Detroit store and already offers insurance to his employees, warns that Obamacares inflexible mandate will inflate health costs and deflate hiring.
And employers arent optimistic about the future. Fifty-five percent tell Gallup that the Affordable Care Act is a misnomer and that will lead to higher health care costs. Twenty-four percent may drop insurance coverage, while 18 percent have reduced the hours of employees to part-time in anticipation of Obamacares mandate.
The mandate delay is only the latest body blow to the health law, as even Democratic senators are rebelling against its job-killing medical-devices tax, insurers are dropping coverage and state health exchanges arent ready for prime time.
Health care reform is endangering the health of American small business. Time for some better medicine.