ObamaCare Celebrates Anniversary of Small Business Job-Destruction

March 21, 2011

Healthcare Law’s Regulations, New Taxes and Fees Stifle Business Growth, Lead to Dropped Coverage


Two days out from the one-year anniversary of their job-destroying healthcare law, a coalition of Obama administration allies is trying to spin its way out of ObamaCare’s devastating impact on small businesses:


“The Center for American Progress will announce today that the events – with such sponsors as AFSCME, SEIU and U.S. PIRG — include ‘small business roundtables/workshops, seniors’ town hall meetings, young adult information sessions, press conferences with Members of Congress and Administration officials … An online campaign featuring videos of real Americans benefitting from the law will complement the grassroots activities. … [T]argeted radio advertising … and social-media advertising … will also be launched…’

“–EVENT THEMESMonday, ‘Moving Forward, Protecting Small Business’s Care’” (Mike Allen, “Health reform turns 1: White House allies plan week-long blitz, ‘Moving Forward'”, Politico Playbook, 3/17/2011)


The facts, however, speak for themselves. ObamaCare is raising costs for small businesses at a time when they are already struggling through a slow economic recovery. Small businesses face several new taxes under ObamaCare:


NATIONAL FEDERATION OF INDEPENDENT BUSINESSES CONFIRMS OBAMACARE WORSENS UNCERTAINTY: “Small-business owners remain deeply concerned that the healthcare law costs too much and further jeopardizes the economic recovery of our nation’s job creators. In fact, more than 90 percent of them favor repeal of the new law.


“The healthcare law actually makes things worse for small business and will lead to continued economic uncertainty…


“New, Expensive Taxes:New taxes mean less money being re-invested into the business, into employees and into growing and expanding. Small businesses already pay 66 percent more in tax compliance than larger businesses. This law levies $570 billion in new taxes…” (“Small Business Looks to the New Congress to Repeal the Healthcare Law,” National Federation of Independent Business, Accessed 3/21/2011)


FINANCIAL ADVISORS ALREADY PLANNING AROUND OBAMACARE TAX INCREASES ON BUSINESSES: “But far-reaching these measures are, like a 10 percent tax for visiting a tanning salon (it took effect last July) and a first-time Medicare bite on investment income (coming in two years). A 40 percent tax on high-value health coverage begins in 2018.


“Financial planners are already ruminating about how the changes may affect clients’ strategies.” (Robert D. Hershey Jr., “Health Care and Taxes: A Pause Before Impact,”The New York Times, 2/12/2011)


In additionObamaCare creates a “compliance nightmare” for small businesses through all its paperwork requirements and regulations:


THE “COMPLIANCE NIGHTMARE” OF 1099 REPORTING REQUIREMENTS:“Business advocates fear it could generate a flood of paperwork. While the provision affects all companies, small businesses will be slammed the hardestbecause they often lack the compliance departments and legions of accountants that corporations retain on staff…


Spend $600 on cell-phone service, at FedEx, or fueling up at the local gas station? Better get their tax ID number. Buy new computers? File a 1099. “It’s going to be a compliance nightmare,” says Rob Seltzer, an accountant in Beverly Hills, Calif. He figures he would go from filing two 1099s to 15.


“Seltzer is on the low end. The IRS says about 85 million 1099-MISC forms are filed each year, and that could jump significantly under the new law. The National Small Business Assn. estimates that the average company will have to file 95 of the forms under the measure, up from fewer than 20 today.“(John Tozzi, “Health-Care Bill Surprise: 1099 Nightmare,”Business Week, 5/27/2010)


“Meanwhile, small businesses are staring in horror toward 2013, when the 1099 mandate will hit more than 30 million of them. Currently businesses only have to tell the IRS the value of services they purchase from vendors and the like. Under the new rules, they’ll have to report the value of goods and merchandise they purchase as well, adding vast accounting and paperwork costs.


“Think about a midsized trucking company. The back office would have to collect hundreds of thousands of receipts from every gas station where its drivers filled up and figure out where it spent more than $600 that year. Then it would also need to match those payments to the stations’ corporate parents.” (Editorial Board, “Review & Outlook: The 1099 Insurrection,” The Wall Street Journal, 9/15/2010)


NEW PAPERWORK BURDEN FOR PHARMACIES THAT “DRIVES UP THE COST OF HEALTHCARE”: “Patients are demanding doctors’ orders for over-the-counter products because of a provision in the health-care overhaul that slipped past nearly everyone’s radar. It says people who want a tax break to buy such items with what’s known as flexible-spending accounts need to get a prescription first.


“The result is that Americans are visiting their doctors before making a trip to the drugstore, hoping their physician will help them out by writing the prescription.The new requirements create not only an added burden for doctors, but also new complications for retailers and pharmacies.


“‘It drives up the cost of health care as opposed to reducing it,’ says Dr. [Sandy] Chung, who rejected much of a 10-item request from a mother of four that included pain relievers and children’s cold medicine.” (Janet Adamy, “In Health Law, Rx for Trouble,” Wall Street Journal, 3/9/2011)


81 PERCENT OF EMPLOYERS REPORT INCREASED ADMINISTRATIVE BURDEN: “[M]ore than 80% of companies indicate that health care reform has increased the administrative burden on their HR departments.” (“16th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care,” Towers Watson, March 2011)


Indeed, many small businesses plan to drop coverage for their workers due to the rising cost of insurance under ObamaCare:


BUSINESSES FACE PENALTY THAT MAY CAUSE THEM TO DROP INSURANCE COVERAGE: “Businesses with 50 or more workers must offer coverage or pay $750 per worker. That penalty applies for every employee if even one signs up for government-subsidized insurance.

“But there are potential problems. Case in point: It would be much cheaper for Dick Bus to drop the generous coverage he now offers and take the hit at $750 a head for his 120 workers. The penalty would be $90,000 a year. He’s currently spending $480,000.

“Bus would save $390,000, but canceling his plan would force his workers to the health plan exchange and could cost more than they’re paying now.” (Jim Axelrod, “How Health Reform Affects Small Businesses,” CBS Evening News, 3/23/2010)


BUSINESSES PLAN TO DROP RETIREE COVERAGE: “More than one-quarter of companies plan to discontinue retiree medical sponsorship in 2012 for at least one segment of current and/or future retirees (Figure 22).” (“16th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care,” Towers Watson, March 2011)


22 PERCENT OF SMALL BUSINESSES INTEND TO DROP COVERAGE: “So why am I challenging the claims of the law’s cheerleaders? Because its effect so far has been a net negative. That’s because many business owners have formed negative expectations of the future effects of the law. For instance, a survey of 459 businesses conducted by Fidelity Investments in June revealed that 49 percent of small employers expect the new law to increase their costs. Many small business owners are responding to these expectations by passing on health insurance costs to employees, by changing the type of insurance they offer, and by planning to drop employee health insurance coverage in the future. (The same Fidelity survey reports that 22 percent of small business owners expect to drop health insurance in response to the law.) In short, any “evidence” that the PPACA has cut small business employee health insurance costs or increased coverage isn’t real.” (Professor Scott Shane, “Small Business Isn’t Celebrating Health-Care Reform,” Business Week, 1/7/2011)


With these job-destroying effects on small businesses, it’s little wonder the public widely wants to see the law repealed. Recent polling backs that up, even in numbers from groups friendly to ObamaCare. When will Democrats abandon their defense of their job-destroying law?:


RASMUSSEN SHOWS 62 PERCENT WANT REPEAL, WITH 51 PERCENT WHO “STRONGLY FAVOR” REPEAL: “Support for repeal of the national health care law has reached its highest level since May of last year. The number of voters who believe the plan will increase the cost of care has tied its highest level since the law’s passage last March.


“The latest Rasmussen Reports national telephone survey of Likely Voters shows that 62% favor repeal of the health care law, including 51% who Strongly Favor it. Only 33% of voters oppose repeal, with 24% who are Strongly Opposed. (“Health Care Law,” Rasmussen Reports, 3/14/2011)


EVEN THE OBAMACARE-FRIENDLY KAISER FAMILY FOUNDATION SHOWS A PLURALITY OPPOSE THE LAW: “The Affordable Care Act’s first anniversary comes as a new Kaiser Family Foundation poll tells us that public opinion on the law remains pretty much where it was a year ago, with 42 percent viewing it favorably, versus 46 percent who view it unfavorably. Dems have not succeeded in selling the law to the public.” (Greg Sargent, “A Year Later, Dems Remain Unapologetic on Health Care,” The Washington Post, 3/18/2011)