The following is a letter to the editor.
By Timothy Frassetto
The Affordable Care Act, also known as ObamaCare, was signed into law by President Barack Obama on March 23, 2010, in an effort to reform the health care industry by providing health insurance to every American. One of President Obama’s strongest selling points in the Affordable Care Act was the potential benefit it would bring to small businesses. It seeks to provide better health care options, while preventing insurance companies from taking advantage of small businesses, thus making it more affordable for them to provide coverage to their employees. However, so far, this has not been true. The Affordable Care Act has raised the price of health insurance coverage, potentially stunting the growth and expansion of the same small businesses that the law aimed to help.
Although President Obama had high expectations for the Affordable Care Act and the positive effects it would bring to the economy, small businesses are not quite as optimistic. In late October 2013, the U.S. Chamber of Commerce and the International Franchise Association released a survey that reported that some 64% of small business owners (companies with a staff ranging from 50-400 employees) believed that this law would have a negative impact on their business while only 5% of the survey believed it would have a positive impact.
At a time when the economy needs to be driven by the growth and expansion of small business, the government healthcare mandates of the Affordable Care Act have increased the cost of providing health care, thwarting possibility of expansion for many small businesses. The Affordable Care Act seeks to provide health insurance coverage for every American, and while in theory this sounds great, the negative reality is that somebody has to pay for this and small businesses have been the primary target.
For these companies, hiring and expansion is being impeded because of these government health care mandates. In a Small Business Survey released in 2013 by the U.S. Chamber of Commerce, 77% of small businesses reported saying that the new health care law will make it more expensive for them to provide health care for their employees. In addition to this, 71% of these businesses said that the Affordable Care Act would make it hard for them to hire more employees and expand.
The American economy has suffered over the past several years in part because of the high unemployment rate. There is a solution to this problem – small businesses. Since 1970, small businesses have accounted for 55% jobs and 66% of new jobs in the country. However, the Affordable Care Act is preventing the growth of small businesses. One requirement in this new legislation is that companies with more than 50 employees must provide health insurance to their employees or they will face a monetary penalty to the government including $3,000 fine per worker. This is inhibiting small business hiring.
My uncle, Mr. William Stablein, a graduate of the Catholic University of America School of Architecture, is a small business owner who is greatly impacted by the Affordable Care Act. His company, WHS Architects of Columbia, MD, currently employs less than 50 people. However, if he needs to expand, he will be very hesitant to hire a 50th employee because of the enormous additional costs he will incur due to the new regulations. If a fiftieth worker is added to his business, he will need to raise the price of his architectural services in order to compensate for the higher cost of providing health care to all employees. But when the price for services such as these increase, there is always the fear that the demand will fall or that companies will be less competitive due to a comparative disadvantage.
This is the dilemma that many small
business owners are currently facing due to the Affordable Care Act. The high costs of complying with the new
health care laws are limiting the growth potential for many small businesses. With the unemployment rate still hovering around
7.3%, we cannot afford to have our primary job creators – small business – be
hesitant to expand.