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Scuba

(53,475 posts)
Mon Oct 7, 2013, 07:57 PM Oct 2013

The New Yorker: THE BUSINESS END OF OBAMACARE

http://www.newyorker.com/talk/financial/2013/10/14/131014ta_talk_surowiecki?mobify=0

Of the countless reasons that congressional Republicans hate the Affordable Care Act enough to shut down the government, the most politically potent is the claim that it will do untold damage to the economy and cripple small companies. Orrin Hatch has said that Obamacare will be “devastating to small business.” Ted Cruz argues that it is already “the No. 1 job killer.” And the vice-president of the National Federation of Independent Businesses called it simply “terrible.” So it comes as some surprise to learn that Obamacare may well be the best thing Washington has done for American small business in decades.

...

Meanwhile, the likely benefits of Obamacare for small businesses are enormous. To begin with, it’ll make it easier for people to start their own companies—which has always been a risky proposition in the U.S., because you couldn’t be sure of finding affordable health insurance. As John Arensmeyer, who heads the advocacy group Small Business Majority, and is himself a former small-business owner, told me, “In the U.S., we pride ourselves on our entrepreneurial spirit, but we’ve had this bizarre disincentive in the system that’s kept people from starting new businesses.” Purely for the sake of health insurance, people stay in jobs they aren’t suited to—a phenomenon that economists call “job lock.” “With the new law, job lock goes away,” Arensmeyer said. “Anyone who wants to start a business can do so independent of the health-care costs.” Studies show that people who are freed from job lock (for instance, when they start qualifying for Medicare) are more likely to undertake something entrepreneurial, and one recent study projects that Obamacare could enable 1.5 million people to become self-employed.

Even more important, Obamacare will help small businesses with health-care costs, which have long been a source of anxiety. The fact that most Americans get their insurance through work is a historical accident: during the Second World War, wages were frozen, so companies began offering health insurance instead. After the war, attempts to create universal heath care were stymied by conservatives and doctors, and Congress gave corporations tax incentives to keep providing insurance. The system has worked well enough for big employers, since large workforces make possible the pooling of risk that any healthy insurance market requires. But small businesses often face so-called “experience rating”: a business with a lot of women or older workers faces high premiums, and even a single employee who runs up medical costs can be a disaster. A business that Arensmeyer represents recently saw premiums skyrocket because one employee has a child with diabetes. Insurance costs small companies as much as eighteen per cent more than it does large companies; worse, it’s also a crapshoot. Arensmeyer said, “Companies live in fear that if one or two employees get sick their whole cost structure will radically change.” No wonder that fewer than half the companies with under fifty employees insure their employees, and that half of uninsured workers work for small businesses or are self-employed. In fact, a full quarter of small-business owners are uninsured, too.

Obamacare changes all this. It provides tax credits to smaller businesses that want to insure their employees. And it requires “community rating” for small businesses, just as it does for individuals, sharply restricting insurers’ ability to charge a company more because it has employees with higher health costs. And small-business exchanges will in effect allow companies to pool their risks to get better rates. “You’re really taking the benefits that big companies enjoy, and letting small businesses tap into that,” Arensmeyer said. This may lower costs, and it will insure that small businesses can hire the best person for a job rather than worry about health issues.
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spanone

(135,627 posts)
2. they truly fear the Affordable Care Act. just like they feared Medicare & Social Security.
Mon Oct 7, 2013, 08:25 PM
Oct 2013

they have nothing to give the people.....nothing.

 

Hoyt

(54,770 posts)
3. It also makes it easier to work as an independent contractor for a number of companies
Mon Oct 7, 2013, 08:35 PM
Oct 2013

who need certain expertise, but not full-time.

There are things that need to be improved especially for lower income folks who are falling through cracks, but the ACA will free a lot of people to pursue careers.

Dragonfli

(10,622 posts)
5. Like you I am critical of the effects on many low income blue collar workers, but the help provided
Mon Oct 7, 2013, 09:21 PM
Oct 2013

to the self employed is enormous.

Having done a great deal of work as both a Contractor and Sub-Contractor in the carpentry and building trades, I know first hand that seeking health insurance for oneself when self employed was so overpriced and unreachable as to be absurd.

I was only able to afford insurance as an employee (and even then usually because the employer would also offer partial payment of the premium as well as access to a large pool).

I have to give credit where credit is due, the change for the self employed of all varieties is one of the biggest items on the pro side of the pros and cons list of the Heritage theory of health care. (I would still like to see an actual health care law passed someday rather than an insurance law as I believe single payer is the only universal solution to the problem of achieving universal health care)

byronius

(7,369 posts)
11. Dude, I just checked my rates for my small business.
Mon Oct 7, 2013, 11:28 PM
Oct 2013

Holy Cow. -30% rates, better plan from my same insurer. WTF. My god. It's beautiful.

 

Thor_MN

(11,843 posts)
12. The GOP is always going on about how they want to help small business, but it always just lies.
Tue Oct 8, 2013, 01:45 AM
Oct 2013

The GOP has been bought by big business which does not want any competition. They fear the ACA because it makes small businesses more likely to succeed.

hedgehog

(36,286 posts)
16. " one recent study projects that Obamacare could enable 1.5 million people to become self-employed.
Tue Oct 8, 2013, 01:03 PM
Oct 2013

1,500,000 new jobs!

That's 10% of the people currently unemployed!

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