It's the law.
A number of high profile conservative business owners have made a lot of news lately over their threats to cut back workers hours and even lay people off as a result of Mitt Romney's election loss, and the certainty that the Affordable Care Act is going to be implemented. For some, those pronouncements provided a strong enough backlash
among customers that they've had to backtrack, attempting to end the bad publicity by not being terrible employers.
Those are the really high profile cases; the business owners who are obnoxious enough to publicly threaten their employees and to tell the world what rotten employers they are. Because of them, because of Fox News, because of a lack of good public education about the Affordable Care Act from the administration and supportive members of Congress, other business owners, especially small business owners, are left with the idea that maybe this Obamacare is just going to be too expensive and too burdensome. That's a big problem, especially for employees of small businesses. Because for those businesses there are some pretty good deals.
Follow me over the jump to see how businesses, small and big, will be affected by Obamacare, and why some of the loudest complainers are the most full of it.
The smallest employers are not only exempt from any potential fine for not providing insurance, if they do or want to provide insurance to employees, they can get tax credits to help do that. That's in effect now for companies with few than 25 employees and wages below $50,000 each. If they offer insurance and pay at least half the premiums, they can receive a tax credit of up to 35 percent of their contributions. After 2014, the tax credit goes up to 50 percent if the business buys coverage through the insurance exchange. Companies that have up to 50 employees and who do not provide health care benefits are not subject to any fines for not providing that coverage. Their employees will be able to get their coverage in the health exchanges the law creates starting in 2014.
Here's one of the greatest things for small business owners: they can afford health insurance for themselves! The Kaiser Family Foundation surveyed large and small businesses this fall for their regular Employer Health Benefits Survey. Their findings for small business owners were striking.
- About one in four small business owners is uninsured, roughly the same as for non-elderly adults generally.
- Just 40% of small business owners get job-based insurance, either from their own job or through a family member. In contrast, almost six in ten non-elderly adults get their insurance through an employer.
- Small business owners rely heavily on the individual insurance market, with 30% of them buying “other private insurance” (the vast majority of which is coverage purchased in the individual market).
[...] In fact, an estimated 60% of small business owners now buying insurance in the individual market have incomes up to 400% of the poverty level and would be eligible for tax credits in exchanges or Medicaid, and 83% of owners who are now uninsured would be eligible for subsidized coverage (split about equally between tax credits and Medicaid).
These are the job creators, the folks conservative so laud. And they're struggling just as hard as anyone else to find good, affordable health insurance, with 30 percent of them (at least) paying a boatload of money to do it. Now they'll be able to afford health insurance. Maybe they'll even be able to expand their businesses, hire more people, and grow this economy for
For employers with 50 or more employees, well, yes, they'll have to decide whether they want to be good citizens, good employers, and ultimately save taxpayers and themselves money, and provide health insurance. These are the employers that will have to pay a penalty if they do not provide health insurance for their full time employees:
or don't pay a significant portion of their employees' coverage.
This is the penalty that the Obamacare haters are screaming about now, that they are threatening their employees over now. Even though these changes don't take place until 2014. Even though the penalties are not in place now. Even though it's pretty much only companies within the health care industry that face any additional tax burden (and indoor tanning salons, arguably not the most effective
"sin" tax) and—here's the crux of the matter for these corporate opponents—wealthy individuals who will eventually be paying the tax bill for Obamacare.
Individuals making more than $200,000 a year will see a 0.9 percent increase in the Medicare payroll tax paid beginning next year. That same two percent of the population will be subject to a 3.8 percent surtax on investment income. Beginning in 2018, there's going to be a big tax hike on high-value health insurance plans, those above $10,200 for an individual plan and $27,500 for a family plan.
But let's get back to those penalties companies will have to pay beginning in 2014, and focus particularly on the businesses that have been most vocal about how the law is going to break them. At HealthBeatBlog.com, Maggie Mahar sums up analysis by other health care writers and economists on just what the costs might be for specific restaurant chains.
Managed Care Matters’ Joe Paduda recently took a hard look at the numbers that led Papa John Pizza founder and CEO John Schnatter to announce that he’s going to have to hike the price of his pizzas by 10 to 14 cents to cover the added cost of complying with Obamacare’s provisions.
“Turns out that it’s only 3.4 to 4.6 cents” for an average-sized pie,” Paduda observes. “Let’s think about that,” he continues. “Fourteen cents a pizza gets all of his employees excellent health coverage (only about a third are covered now), even though Schnatter says he’d ‘like to cover all of them.’”
Over at Forbes, Caleb Malby eyeballed Schnatter’s balance sheet and confirms Paduda’s appraisal: Obmacare does not constitute a major threat to profit margins. “Last year, Papa John’s International captured $1.218 billion in revenue,” he reports. “Operating expenses were $1.131 billion.” Schnatter claims that Obamacare will his cost his company $5-8 million annually. “If Schnatter’s math is accurate,” Malby writes, “ the new regulation translates into a .4% to .7% (yes, fractions of a percent) expense increase.”
“Using Schnatter’s figures,” he concludes, “the costs his company will incur due to Obamacare are not equal to the price increases he mentions. Those increases would more than make up for damage done to the company’s net income through increases to operational expenses.”
Here's a thought for these companies: having healthy employees, who feel that their employer gives a shit about their well-being might just increase job satisfaction, and might just decrease absenteeism and employee turnover, increase productivity, and with all that, might just increase profits. It could happen.
So if your employer, particularly if your employer has 25 or fewer employees, is telling you that your hours have to be cut or your job is in jeopardy in 2013, they are likely very full of shit. Because their profits are not endangered now. They're not making smart business decisions. They're making vindictive political ones.