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You are here: Home / Economics / C.R.E.A.M. / Obamacare for the Small Businessman

Obamacare for the Small Businessman

by Anne Laurie|  October 24, 20136:11 pm| 42 Comments

This post is in: C.R.E.A.M., World's Best Healthcare (If You Can Afford It)

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waiting for obamacare davies

(Matt Davies via GoComics.com)

.

Nice little forwarding-friendly argument from Jame Surowiecki, in the New Yorker, on “The Business End of Obamacare“:

…[T]he overwhelming majority of American businesses—ninety-six per cent—have fewer than fifty employees. The employer mandate doesn’t touch them. And more than ninety per cent of the companies above that threshold already offer health insurance. Only three per cent are in the zone (between forty and seventy-five employees) where the threshold will be an issue. Even if these firms get more cautious about hiring—and there’s little evidence that they will—the impact on the economy would be small.

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… [S]mall 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… 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…

The U.S. likes to think of itself as friendly to small businesses. But, as a 2009 study by the economists John Schmitt and Nathan Lane documented, our small-business sector is among the smallest in the developed world, and has one of the lowest rates of self-employment. One reason is that we’ve never had anything like national health insurance. In a saner world, changing this would be a reform that the “party of small business” would celebrate.

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Reader Interactions

42Comments

  1. 1.

    Baud

    October 24, 2013 at 6:17 pm

    Great information and messaging.

  2. 2.

    srv

    October 24, 2013 at 6:19 pm

    You know, if all those libertarian IT farts at big companies would stop whining use this as an opportunity to go out on their own, it would be like a new renaissance.

  3. 3.

    bemused

    October 24, 2013 at 6:25 pm

    I don’t think I will hold my breath waiting for cable/network tv news to cover this.

  4. 4.

    Violet

    October 24, 2013 at 6:27 pm

    I call our current employer-based healthcare system “healthcare handcuffs.” The new law will allow those people who are staying in crappy jobs just for the health insurance to leave those jobs and do something else. Especially for those people who have health issues where they cannot be without medical coverage or have a spouse or child with a pre-existing condition or other issue, this law will really open up the world. People can get health insurance AND work for themselves. I think it’s going to open up an era of entrepreneurship.

  5. 5.

    JustRuss

    October 24, 2013 at 6:35 pm

    we’ve had this bizarre disincentive in the system that’s kept people from starting new businesses.

    For the people who matter, that’s a feature, not a bug, or our healthcare “system”.

  6. 6.

    Corner Stone

    October 24, 2013 at 6:35 pm

    Mmmmm, blessed synchronicity.

  7. 7.

    jon

    October 24, 2013 at 6:48 pm

    @Violet: Just think of all the old employees who would love to retire but aren’t 65, but couldn’t even consider getting their own insurance under the old market. Job prospects for younger workers may get better in the next few years.

    I kept a shitty job in a prison for years just because I couldn’t find another job that had benefits.

  8. 8.

    Chyron HR

    October 24, 2013 at 6:55 pm

    @jon:

    I kept a shitty job in a prison for years just because I couldn’t find another job that had benefits.

    I suspect the parole board also played a part.

  9. 9.

    Jay C

    October 24, 2013 at 6:57 pm

    @bemused:

    Nope: not tonight, anyway; the nitely news I saw focused mainly on the Congressional hearings on the website fiasco ( with a subsidiary focus on the supposed hiatus of regulations/instructions during the Presidential campaign ) and another piece on policyholders in CA getting their policies cancelled (with cost increases) – for reasons which they didn’t really articulate; tho they were careful to note President Obama’s ” no change” comments –
    IOW, the usual media dump on the Admin….

  10. 10.

    Russ

    October 24, 2013 at 6:57 pm

    you know all this commotion about the ACA is just that, let’s worry about it one or two years from now and see what improvements it needs. A long term approach is what is needed.

    Lets move the focus to other things that need addressing.

    I also worry about what is sliding under our radar while we as a country focus on a law that is just that. a law.

    let the republicans do their thing. we know what they will do and the smarter people should pay attention to other things.

  11. 11.

    Elizabelle

    October 24, 2013 at 6:58 pm

    @Chyron HR:

    cruel, but very funny

    Agree that ObamaCare will be a job creator, and for good reasons.

  12. 12.

    Gvg

    October 24, 2013 at 7:00 pm

    It is taught in business schools that our small business start ups have been dropping for years. this is considered a bad thing because some small percent of the new small businesses are supposed to be tomorrow’s big successful companies and replace some of the current big successful firms that are going to die out. It is a matter of statistics. businesses have lifespans and some are always going to be dying at any time. sometimes the reason is an end to the market, other times it is better competition. when we have fewer startups, we end up with a future with fewer businesses (and jobs). we also end up with too many super conglomerate corporations IMO.
    I am hoping this does lead to more new startups. In theory it should.

  13. 13.

    bemused

    October 24, 2013 at 7:08 pm

    @Jay C:

    If it does get reported, I have no doubt there will be the usual “other side” people on to knock it down.

  14. 14.

    Elizabelle

    October 24, 2013 at 7:18 pm

    @Violet:

    I call our current employer-based healthcare system “healthcare handcuffs.”

    You called it right.

    Who doesn’t know someone in that situation, or even a parent who’d like to work less hours and spend more time with the family (you know, family values), but can’t because healthcare is tied to the job or more than part-time hours.

  15. 15.

    LanceThruster

    October 24, 2013 at 7:21 pm

    I remember hearing about how this coverage will destroy US global competitiveness, at the same time a Canadian firm was awarded a big US contract.

  16. 16.

    Schlemizel

    October 24, 2013 at 7:23 pm

    OMG! I had to check to make sure it was not April 1st! The wingnuts at the American Enterprise Institute have a column up saying its all the GOPs fault.

    http://www.aei.org/article/politics-and-public-opinion/lets-just-say-it-the-republicans-are-the-problem/

  17. 17.

    Gin & Tonic

    October 24, 2013 at 7:28 pm

    @LanceThruster: Anecdata, I know, but at my work we ended up taking over a project (not our choice) that had its primary development done by CGI, the Canadian company in question, who’s primary on healthcare.gov. Our dev management’s top priority more or less from day one was how do we get them out of the picture and bring every aspect in-house so we could do it better. I wouldn’t call them incompetent, necessarily, but we added resources to the project just to get them out of the picture as quickly as practicable.

  18. 18.

    Just One More Canuck

    October 24, 2013 at 7:28 pm

    @Schlemizel: From April 30, 2012, but no less true now

  19. 19.

    Gin & Tonic

    October 24, 2013 at 7:29 pm

    @Schlemizel: Um, you know that opinion piece is a year and half old, don’t you?

  20. 20.

    Jim, Foolish Literalist

    October 24, 2013 at 7:30 pm

    @Elizabelle: IIRC, one of Michelle Malkin’s anti-Obamacare tweets was that her sister ‘in the crappy job with the creepy boss’– apparently this was a situation her followers were aware of– is going to lose the healthcare that is the only reason she stayed at said crappy creepy job. Obviously, the facts are questionable, but not the attitude. The system that kept her sister stuck in that job is the one she’s fighting to preserve.

  21. 21.

    Mike in NC

    October 24, 2013 at 7:31 pm

    @Schlemizel: Wow. How soon before a retraction is made?

  22. 22.

    Elizabelle

    October 24, 2013 at 7:34 pm

    @Jim, Foolish Literalist:

    How sad.

    Is Michelle Malkin’s sister also absolutely unemployable but for where she is?

  23. 23.

    JPL

    October 24, 2013 at 7:38 pm

    @Schlemizel: Since I refuse to link to it, what’s the catch?

  24. 24.

    LanceThruster

    October 24, 2013 at 7:40 pm

    @Gin & Tonic:

    Thanks. A lot more detail than in my tidbit. If I remember correctly, it was in some industrial production of some sort.

  25. 25.

    Omnes Omnibus

    October 24, 2013 at 7:41 pm

    @JPL: It’s Ornstein. AEI keeps him around in order to save some tattered shreds of its dignity.

  26. 26.

    Yatsuno

    October 24, 2013 at 7:45 pm

    @Omnes Omnibus: I noted that as well. If anything Ornstein has been beating that drum even harder.

  27. 27.

    Omnes Omnibus

    October 24, 2013 at 7:48 pm

    @Yatsuno: I bet he is popular in the cafeteria.

  28. 28.

    Schlemizel

    October 24, 2013 at 7:54 pm

    @JPL:

    They do sort of play ‘both sides do it’ but blast the media for doing that & admit that the GOP has left reality making compromise impossible.

  29. 29.

    Yatsuno

    October 24, 2013 at 8:07 pm

    @Omnes Omnibus: Could you imagine working in a place like that? I’d probably shoot someone the first day. And I don’t even own a gun.

  30. 30.

    Chris

    October 24, 2013 at 8:30 pm

    The U.S. likes to think of itself as friendly to small businesses. But, as a 2009 study by the economists John Schmitt and Nathan Lane documented, our small-business sector is among the smallest in the developed world, and has one of the lowest rates of self-employment. One reason is that we’ve never had anything like national health insurance. In a saner world, changing this would be a reform that the “party of small business” would celebrate.

    I’d love to see a poll of how small business owners themselves feel about this. There are entirely too many of them bleating “leave our Galtian overlods alooooone! Leave them alooooone!” but not as many as the “party of small business” would like us to think. I’m just curious to see what the actual breakdown is.

  31. 31.

    satby

    October 24, 2013 at 8:57 pm

    Well, I’m going to be one of those people who bails on the shitty corporate job after the first of the year to start my own business and it is mostly ACA that is making it possible. I think stress would kill me if I remained at my current job for 6 more years until I would be eligible for Medicare.

  32. 32.

    schrodinger's cat

    October 24, 2013 at 9:06 pm

    For the life of me I don’t understand why buggy software of the exchanges is such a national media obsession, have they never had to deal crappy difficult to use enterprise software before?

  33. 33.

    PhoenixRising

    October 24, 2013 at 9:10 pm

    I’m getting applications for our (very highly paid hour) contract positions from single younger applicants with the right experience to succeed at the small business I run.

    From folks who will be available around the first of the year.

    I’ve never seen a stream of resumes like this in 15 years of running the same help-wanted ad.

    Praise the Lard and pass the Obamacare, y’all. In addition to real coverage for our family, for the first time ever (wife had cancer in 1994, has been without health insurance that will pay for anything for 19 years; at diagnosis she was 29 and worked for a small business that lost their insurance coverage the next year because of ‘experience ratings’…) I also get renewed life for a business that’s been hard to staff with anyone who isn’t either pushing Medicare or the kind of risk taker that isn’t compatible with ethical sales practices.

    I’d say the hours I spent (making the money to) help elect this president were well worth it.

  34. 34.

    Xecky Gilchrist

    October 24, 2013 at 9:12 pm

    “With the new law, job lock goes away,” Arensmeyer said.

    I’m sure this is a huge part of the reason Redoublechins hate this law so much. It chips away at the master-servant relationship between bosses and labor.

  35. 35.

    PhoenixRising

    October 24, 2013 at 9:13 pm

    @schrodinger’s cat: The people who decide the narrative for the news have never shopped for an individual health policy.

    If they had, they would be joining me in a prayer of thanksgiving. I’m an atheist and it ain’t even November yet, but it only took 3 hours to get registered and shop for coverage that will actually cover something.

    Our media overlords have jobs at groups of more than 50. It’s that simple.

  36. 36.

    Elizabelle

    October 24, 2013 at 9:14 pm

    @PhoenixRising:

    That’s a wonderful testimonial.

    I say shoot that info in a letter to the White House.

    It might cheer the resident.

  37. 37.

    schrodinger's cat

    October 24, 2013 at 10:06 pm

    @PhoenixRising: True but even they must have encountered the blue screen of death, at least sometimes in their cushy lives.

  38. 38.

    Betsy

    October 24, 2013 at 10:16 pm

    @Xecky Gilchrist: //redoublechins\\ SHRIEKING ON FLOOR thanks and I will be using that.

  39. 39.

    jon

    October 25, 2013 at 12:44 am

    @Chyron HR: If I had been an inmate, that $5 deductible* would be awesome considering the monthly premium is 100% subsidized by the government.

    Alas, I was sent home each evening after the workday. I can’t say it was fun to go to back again each morning, but it’s a lot better than being a resident.

    *the inmates had a charge to see a physician, and those who were indigent merely had it charged to their accounts, so no one was denied care. But the charge was there to reduce those inmates who were just seeking pain medication or trips to the hospital on weekends of good sporting events on television or bad meals at the prison.

  40. 40.

    Ruckus

    October 25, 2013 at 1:38 am

    I don’t understand the idea that small businesses don’t like the ACA. What the hell is not to like? That it isn’t better? OK I get that. That it isn’t cheaper? The vast majority of people seem to be getting better and cheaper insurance. That they will have to provide insurance for their employees? Oh wait… didn’t I read on BJ, that 96% of companies are under 50 employees and have no requirements?
    Once again what’s not to like?

  41. 41.

    Tom Servo

    October 26, 2013 at 10:20 am

    @Gvg: Also, in terms of innovations, startups are absolutely essential. Startups are the ones who mostly push the envelope.

  42. 42.

    Anderson

    October 31, 2013 at 7:19 pm

    Wonderful article. I loved while reading it..

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