The main beneficiaries of the Affordable Care Act, known more commonly as Obamacare, are working class, uninsured Americans. This legislation will make available to them affordable and comprehensive health insurance policies either through the planned health insurance exchanges or their employer.
But there is another group who are the losers when it comes to Obamacare, and they are small businesses.
The primary mechanism through which Obamacare plans to provide coverage for the uninsured is through the so called "employer mandate." That is, any business employing at least 50 full-time workers will have to offer them health insurance or face financial penalties.
For workers without insurance this is good news. Of course it's always going to be better to be insured rather than uninsured. However what does the mandate mean for businesses?
It means more costs.
The financial crisis and the subsequent sluggish economy have already done a number on small business profit margins. Now with analysts saying that the economy is finally showing signs of growth, American small businesses are about to have another drain on their profits.
Small businesses have always paid more for group health insurance than their larger counterparts. In fact, according to the National Center of State Legislatures, small businesses paid about 18 percent more than larger firms for the exact same policy.
Being mandated to purchase that kind of insurance has small businesses worried about being able to keep their doors open. This issue was supposed to be at least partially addressed through the Small Business Health Options Program or SHOP exchanges. These health insurance exchanges for small businesses were intended to allow businesses to shop around for more affordable insurance and be able to offer their employees a choice for plans.
Now in the 33 states where the federal government will be operating the health care exchanges, the SHOP program will not be launching with the individual exchanges in 2014. Instead it's being pushed back to 2015. Meaning that for next year, small businesses will be limited to just one plan.
The New York Times perfectly captured the feeling of these small businesses being stuck between a rock and a hard place over Obamacare in a piece published in March.
The article profiled a California bakery's struggle over how to deal with the Obamacare regulations. According to the article, the full cost of offering their employees insurance would have carved 65 percent out of their annual profits, and not complying with the mandate would lose them 64 percent.
The point of the piece was that businesses are feeling squeezed by Obamacare and aren't sure what to do. Although it was originally a well-intentioned piece of legislation with the interests of lower-income Americans in mind, it is already having some unintended consequences.
Consequences that could wreck some real economic havoc as small business pour their profits into expensive insurance plans.
Come Jan. 1, 2014 we'll start to see what the real cost of the law will be.
Michael Cahill is the editor of the Vista Health Solutions blog. Follow him on Twitter at @Vistahealth.
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