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Tuesday, December 31, 2013

The affect of healthcare law on U.S. businesses

The Patient Protection and Affordable Care Act, also known as Obamacare, has been legitimated on the basis of taxation by the U.S. Supreme Court. This means small businesses that were hoping to not be affected by the healthcare law will still have to comply with its provisions. Small businesses will be faced with weighing the costs of more affordable health insurance for employees with tax penalties and and being required to provide insurance that they previously did not.


Healthcare and business costsCosts of providing healthcare benefits also vary by business size. Beginning in 2014, businesses with under 50 employees do not have to provide health care insurance to employees, per The Street. However, businesses with 50-199 employees have the option to pay a fine per each employee not insured by the business; employers with over 200 employees will be federally required to provide employee health coverage. Moreover, according to the Bureau of Labor Statistics, healthcare benefit costs vary by business type with unionized labor being more expensive than service labor.


The hiring process also stands a chance of being affected by Obamacare. Some employers will either be less willing to hire on the grounds of additional costs, or will evade the law by under-hiring employees per an employer interview with CNBC. Wages and salary raises are other ways employers will offset the costs of mandatory healthcare per National Public Radio. Furthermore, with unemployment already high, the added headwind of the Patient Protection and Affordable Healthcare Act will further strain employer hiring.


The tax code changes brought about by Obamacare will include a $2,000 fine for businesses with between 50-199 employees that do not offer healthcare insurance to their employees per the Street. However, to help lower the expense of being required to provide healthcare insurance, businesses will also qualify for a tax credit. This healthcare tax credit will cover up to 35 percent of the premium cost of insurance per the Whitehouse. Added to the lower cost of healthcare insurance overall, small businesses will be alleviated of higher costs, but not from a new form of taxation.


An indirect affect of the Patient Protection and Affordable Health Care Act is its influence on national economics. Furthermore, if the tax drag of the healthcare law proves to be too much of a burden on the economy, businesses could pay another price in the form of lower revenues and profit margins. This is because the individual mandate to carry health insurance influences consumer spending. Since consumer spending is a large factor in economic growth, a cycle of lower revenue, and unemployment is possible if the economy is unduly strained by the law.


Political gridlock in Congress over healthcare law is also contributing to economic instability per U.S. News. Republican Presidential candidate Mitt Romney has vowed to repeal the Patient Protection and Affordable Healthcare Act and Speaker of the House, John Boehner has pledged to do the same per New England Cable News. Wide dissent among members of organizations such as the National Federation of Independent Businesses also serve as a bellwether of business sentiment.

Image license: Pixabay/Nemo; US-PD