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Gene Marks

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Why Small Business Should Wait On Health Care Decisions

Posted: 09/11/2012 1:52 pm

"I like the name 'Obamacare'. This law is here to stay." President Obama at a pre-convention rally this past Sunday.

"I will repeal "Obamacare.""
Mitt Romney at last week's Republican National Convention

"My health insurance bill is... WHAT?"
Millions of small business owners at various times in 2012

The Affordable Care Act, otherwise known as health care reform, otherwise known as Obamacare, is of course a huge part of this year's election. And with the recent Supreme Court ruling that validated the legislation's constitutionality behind his back, it's full steam ahead for President Obama. Which means potential big changes for all business owners, big and small.

A quick recap of these changes, because you'll never hear this enough.

If, like me, you have less than 50 full time equivalent employees (and let's not get into THAT calculation right now) we are exempt from the requirement that you have to provide health care insurance. But the law still affects us. And mostly in a good way. Sure, we will all be personally required to have our own health coverage or incur a penalty of up to 2.5 percent of our adjusted gross income. That's the mandate. And if we do provide qualified health insurance for our employees then we may be able to benefit from a tax credit. And regardless of where our insurance comes from, the law now requires carriers to provide a host of extra benefits like covering people with pre-existing conditions and dependents up to the age of 26, as well as offering additional incentives for wellness programs and diagnostic testing.

If you are an employer with more than 50 full time equivalent people then you will be required to provide qualified health insurance coverage for your full time employees. If you don't, then you'll be fined up to $2,000 per employee who has no coverage. Actually, even if you do provide health insurance but your employees get subsidized coverage on their own from a state exchange (see below) your penalty may be as high as $3,000 per employee. There's more to this calculation. But you get the idea.

Individuals and business owners will have the opportunity to purchase their health insurance through state operated exchanges. Picture iTunes, but instead of downloading Beyonce's latest you're buying health insurance. It won't be $0.99 but we're assured by our government that we will have plenty of choices at lower costs than we're paying right now. That's because insurers will compete against each other to offer these plans on these exchanges and their potential market of customers will be expanded to include the more than 32 million people who currently don't get health insurance at all. The government will help out those who can't afford it and fine those that can but still don't buy.

This is what's happening right now. It's the law. It's reality.

As I write this the wheels are turning. Teams of lawyers at the Department of Health and Human Services (HHS) are filling in the details to this massive legislation (and many details are still yet to come). Billions are being spent to help the states get their exchanges up and running. Physicians and other health care providers are bracing for changes in the way they bill and provide service. The owners of health benefits firms are consuming massive quantities of Xanax and stuffing money in suitcases for their upcoming trips to Switzerland and Bermuda. Medical device and pharmaceutical manufacturers are huddling together to devise crafty new ways for pricing their products that will take into account the new taxes levied on their businesses by the legislation.

But wait... like that terrifying situation in Batman Begins where we thought that all was lost and Ra's al Ghul's plot to destroy Gotham City by vaporizing their water supply into gas laced with the Scarecrow's fear-inducing toxin would cause its entire populace to go insane, Batman intervened. This is the situation we are in. Please don't get the wrong idea: Mitt Romney is no Batman (although I do admit that Paul Ryan wouldn't be a bad Robin). But if Governor Romney wins the November election he will also intervene. He has promised to stop the legislation. And you know what? He can do that.

President Obama did that with former President Bush's "No Child Left Behind" legislation. That was the legislation passed in 2001 to mandate, among other things, standardized testing in our public schools. Senator Obama campaigned against the legislation. And even though President Obama didn't have the Congressional votes to overturn it, he did have the power to effectively sabotage it. He allowed the HHS department to issue "waivers" to those states that didn't want to implement the legislation, which effectively allowed their schools to ignore it. A newly elected President Romney could do the exact same. His HHS department could allow states to legally wiggle out of the requirement to create exchanges or comply with other aspects of the Affordable Care Act. Some states have already opted out of the Act's required expansion of Medicare after the recent Supreme Court ruling allowed them to do so.

And, assuming he has the 51 filibuster-proof votes needed in the Senate and maintains a majority in the House, a President Romney can then go to town on the Affordable Care Act not by overturning the legislation, but by taking away its teeth through budget cuts. Which means that line items that fund the most essential parts of the legislation would be taken away, effectively halting the process altogether. The mandate would still be in place. But if many states aren't participating and most of the key parts of the legislation go unfunded so that they are stagnant it's unlikely that the Democrats will continue to push for penalties on those that don't have the coverage. And without the funding, who's going to audit all those people and enforce the law anyway?

Even Ezra Klein, one of my favorite journalists and a long-time advocate of Obamacare (although he considers the legislation to be imperfect and needing improvement) admits that "if Mitt Romney wins the election and Republicans take control of the Senate, they should repeal the Affordable Care Act. At that point, they will have won two straight elections atop a platform in which repealing the ACA was a central, explicit promise. The American people will have spoken with unusual clarity, and part of what they will have said, whether they meant to say it or not, is repeal the ACA."

What does this mean for small business owners like me? It means we wait. Again. We wait until November. We make no moves. We watch carefully. We stay current on the health care reform issues as it affects our businesses. And we get ready to take action.

Because if President Obama wins another term it's full steam ahead with the Affordable Care Act. And we will have lots of decisions to make before January 1, 2014. It will not be business as usual for many. And few truly know whether the outcome will benefit or harm us over the long term. But smart business people will adapt and comply and figure out the best plan for their companies. However, if President Obama loses and the Senate turns Republican, then a whole new set of rules will apply. And the Affordable Care Act will inevitably be halted in its tracks. Which means status quo. Confusion. Rising premiums. You know... the good old days. And the business community will once again have to watch from the sidelines as Washington tries to figure out a better solution to our health care problem.

Another version of this blog appeared on Inc.com.

 

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