Obamacare Hurts the Core of America

Make no mistake, Obamacare hurts the core employers of America.  How so?

First, large employers are exempt from some of the rules.  Large employers with over 100 FTE’s are exempt from many of the regulations regarding what is considered “Essential Health Benefits.”  Thus the larger employers will have the ability to offer health plans that may provide less benefits than small employers will be required to purchase.  This translates into a potential cost advantage and can crimp margins of small employers as they try to compete against the largest national employers.  Most likely, this benefit will not be realized except by the largest: those who employ 500 or more.  According to the 2008 Census data, this group accounts for 51% of the employed workforce.  WOW! That’s a big group to exempt from the rules…

Second, the smallest employers, under 19 employees are exempt from the rules. These  account for 18% of the employer workforce with one third of these being firms with 4 or less employees.

So who is going to pay the tax?  You guessed it, the core group who account for 32% of the workforce:  employers of 20 to 499 employees.   Those between 20 and 50 are exempt, but employees will be required to buy insurance.  Overall, this group will most likely be the largest employer of part time workers.  They will also have the least resource to absorb the added cost of regulatory reporting and administrative burden required to track the regulations.  Finally, and most important, this group will most likely have less options for choosing healthcare alternatives.  This group will be required to offer the “standard” Essential Health Benefits at the cost available.  This group will most likely have the greatest burden of additional tax penalty as a percentage of profit.

Tracking the Health Care Regulations will be a nightmare.  Understanding the financial impacts and alternatives will be difficult.  In some cases it will be cheaper for a company to take the tax risk in order to remain competitive.   Businesses will need to understand the demographics of their employees and model the costs and risks regularly.

Hey, I’m not from the government, but I am here to help…

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