What makes sense about Obamacare?
At the moment, from what we’re observing, not much.
The main purpose of Obamacare, according to politicians, is to make sure that the 50 million uninsured Americans are able to have access to affordable insurance and quality care.
But in order to do this, the federal government is putting an inordinate burden on business in this country, from the mom-and-pop shops to Fortune 500 companies.
When the employer mandate was postponed, that was a clear indicator that, from an administrative perspective, the feds just aren’t ready. One glaring example of this is that the initial plan for the IRS to handle consumer compliance was rejected by the organization itself.
Therefore, at the moment, there is no way to make sure consumers and businesses are playing by the rules, and there is no system in place to bill and receive penalties and fees.
The fees (in addition to taxes levied on health insurance carriers) are one of the sources of funding for Obamacare, and right now we don’t know who is collecting the money or paying the bill.
But for individual businesses with 50 or fewer employees, the main issue in 2014 is going to be whether or not they can afford to offer insurance, and/or whether their employees are able to help pay for it.
When insurance companies become liable for the higher taxes as well as the costs associated with instituting the new federally-mandated plans, they will pass the increases on to businesses, which will, in turn, pass them on to their employees in some form.
For most small businesses, offering insurance benefits will not be feasible unless their staff can help offset the costs through payroll deductions or salary cuts.
What we are already seeing with employers with 51 or more staff members is the tendency toward hiring part-time people versus full time. With a legal requirement to insure full-time workers, companies can either try to meet the higher insurance rates, share some of the burden with their employees, or find ways to make do with a labor force that works 30 hours or less per week.
We all have a chance to regroup for another year until the laws go into effect for business.
In the meantime we can observe what happens in the consumer marketplace for the individually insured. I think watching the federal government attempt to make sure 50 million people get on an insurance plan will be quite a task on its own without the business component.
Only time will tell whether any of this is going to make sense in practice.
In theory, it doesn’t look good for anyone.