Academic journal article Academy of Entrepreneurship Journal

Small Business and Obamacare: Ripple Effects When the Cost Is "Too High"

Academic journal article Academy of Entrepreneurship Journal

Small Business and Obamacare: Ripple Effects When the Cost Is "Too High"

Article excerpt

INTRODUCTION

This paper explores issues that are on the immediate horizon as small businesses attempt to maneuver the Patient Protection and Affordable Care Act (2) (ACA, a.k.a., Obamacare), as amended by the Health Care and Education Reconciliation Act (3) Various aspects of the implementation of the law have received abundant attention in the popular media. Most notably, these have been glitches (Another ObamaCare website suffers delays, glitches ahead of launch date, 2014; Chumley, 2013; Lahm, 2014a; Weigel, 2013) and alarming security flaws (Gertz, 2014) with the HealthCare.gov website; millions of individual and group policy cancellations (Gottlieb, 2013; Lahm, 2014a; Myers, 2013; Roy, 2013a) and the characteristics of new enrollees; and with these cancellations, the revelation that notwithstanding campaign promises on the part of the President (Obama, 2010) and others most health insurance policy holders will not be keeping their current plans, doctors, or provider networks. Considering the name, logical proposition, and sales pitch before the passage of the ACA, that of "affordability," the cost of health care, including insurance policy premiums, deductibles, co-pays, out-of-pocket costs, a paperwork and compliance burden, and other expenses for small businesses and consumers amount to a betrayal of public trust which is of historic proportions. As an example of what may be an insurmountable flaw, mixing health care with the IRS may prove to be a prescription for a headache that will not go away.

However, other aspects of the law's implementation have not been discussed as widely. The law has myriad tentacles, and the unnatural interconnectedness it created among some government agencies and their respective processes has resulted in a pattern of delays that has triggered tremendous uncertainty. Some small businesses "won a reprieve" (Needleman & Loten, 2014) from Obamacare until 2015 or later, but "the penalty for not buying insurance is going up" (Klein, 2014b). The ACA's nuances and impact, whether small business owners may be deciding to pay penalties (Coombs, 2013; Neiburger, 2011), provide health insurance coverage, or otherwise attempting to mitigate unfavorable consequences of the law are a game-changer. According to testimony by the founder and president of the Galen Institute (a not-for-profit health and tax policy research organization) before the US House of Representatives Committee on Small Business Subcommittee on Investigations, Oversight and Regulations:

Even though small businesses are exempt if they have fewer than 50 employees, it presents a huge obstacle to their growth. And even if the company is small enough to escape the mandate, each of the employees still will be subject to the individual mandate in PPACA. The costs and disruptions are enormous. (Turner, 2011, p. 11)

Noting that health insurance has been a top issue for small businesses for decades (Dennis, 2013), they are also attempting to leverage any positive changes under the law. Meanwhile, the reprieve was only temporary (depending on the size of a given business), and a schedule with higher and higher penalties (as a flat-fee or a percentage of income, whichever is greater) over time was not adjusted despite the postponements.

LITERATURE REVIEW

This present paper is conceptual in nature. However, this should not suggest that a rigorous scholarly methodology has not been employed. In the past year, the author(s) have conducted numerous literature reviews in connection with ongoing research efforts. Simply put, and to summarize the results of these efforts, scholars who work within the realm of small business and entrepreneurship research have not developed many contributions to the literature-the scholarly pipeline has yet to carry more than a trickle while at the same time, coverage in the popular media is ongoing.

Providers of database content including scholarly journals in these search efforts have included Ebsco databases such as: Academic Search Complete, Business Source Complete, Entrepreneurial Studies Source, and Small Business Reference Center, as well, the ProQuest Entrepreneurship database has also been consulted. …

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