It’s easy to see why Obamacare’s unpopularity grows substantially with every new detail that comes out. As former House Speaker Nancy Pelosi (D–CA) infamously noted, we had to pass the bill to find out what was in it. Well, now we know.
Many businesses affected by Obamacare—those not lucky enough to receive the coveted waivers—now view their slimming insurance options with extreme caution.
A shocking new study out by McKinsey and Company finds that 30–50 percent of employers who currently provide health insurance for their employees are likely to drop their coverage. Yes, that's right. Even if you like your insurance, you will not be able to keep it, as President Obama often and famously promised.
Obamacare offers subsidies to low- and middle-income workers who don’t have employer coverage while fining employers that do not offer coverage. But for employers, paying the fines will be a lot less expensive than continuing to offer coverage. As the McKinsey report correctly notes, that will still be true even if employers also pass the remaining savings (after paying the fines) onto their workers in the form of higher cash wages or other benefits such as extra vacation days or increased retirement plan contributions.
In a recent paper, Heritage’s Paul Winfree and Brian Blase write that “the subsidies will encourage employers to drop coverage, perpetuate an already inequitable tax code, and discourage work and upward mobility.”
Essentially, employers are being forced to drop their coverage in order to remain profitable. Thus, many of their employees will have no choice but the state exchanges for health care coverage.
Small business is the lifeblood of the American economy, and employers are now being forced to reckon with new health care coverage mandates on top of a host of new and costly regulations in other areas. All of these regulations are expensive barriers that discourage entrepreneurship and job creation.
The effects will be particularly severe on businesses that employ mostly lower-wage workers, such as restaurants, retail stores, nursing homes, hotels, etc. But Obamacare’s mandates are equal-opportunity small business destroyers. Any business with more than 50 employees must provide the coverage or pay the penalty fee. Either option is likely to damage many of those businesses, because their profits won’t cover either the increased cost of coverage or the new penalties.
Scott Womack, who owns 11 IHOP restaurants in the Midwest, is extremely worried about the costs the law’s mandates will impose on his businesses.
“I believe you can’t put a mandate on a business like ours unless you know that an industry can actually pay for it, and without a doubt, this industry cannot pay for it,” said Womack in an exclusive video interview with the Heritage Foundation. “This legislation is going to cost anywhere from $7,000 to 10,000 per employee. … We’re going to have to take drastic actions to trim employees hours down, to trim services, look at cutting a lot of things that we pay for now to make room for this.”
It’s clear that Obamacare’s overbearing mandates are structured in a way that hurts business growth and jobs in America—something we desperately need to improve right now. The nation’s employment rate increased again last week to 9.1 percent.
Of the 204 new Obamacare waivers the Obama Administration approved recently, 38 are for restaurants, bars, and hotels in Pelosi’s district. At the same time, Senate Majority Leader Harry Reid’s (D) state of Nevada received a separate waiver from a different Obamacare requirement—one imposed on health insurers but not employer plans—because of the concern that without the waiver insurers would stop selling coverage in Nevada’s individual health insurance market. If Obamacare was so great for these two crusaders, then why isn’t it good enough for their states now?
The employer mandates are simply too overbearing. As it turns out, most businesses want a way out. Only the few, privileged, and politically connected stand a chance.
As Representative Mike Pence (R–IN) said, “Higher taxes and government regulations invariably have a cost, and that’s almost always a cost of jobs.”
And that’s something America simply can’t afford.