Health-Care Faceoff

Obamacare: Good or bad for small businesses?

Health Care

NEW YORK -- The Wall Street Journal presented the pros and cons of the Affordable Care Act for small business owners in a recent issue, asking the titular question: Will the health-care law help small business. The debate pitted the benefits--“At last, affordable options”--against the drawbacks--“It will make it harder for small firms to grow.”

Here is a digested look at the debate.

President Obama's Patient Protection and Affordable Care Act has rewritten the rules on health insurance, and it has left small companies scrambling to figure out what it means for them, the newspaper reports.

The section that has caused the most fuss among businesses is the so-called employer mandate. Companies with 50 employees or more must provide health coverage or pay a fine. And that coverage must meet new minimum standards.

Critics say the new requirements will cost small companies more and stall their growth, as well as forcing them to take on lots of new bookkeeping and other administrative headaches.

 Advocates argue that premiums will likely rise only slightly, and they will be much more predictable than they are now. They also point out that the act doesn't apply to companies with fewer than 50 employees--the firms that theoretically would be hardest hit--and say that the act opens up new options for companies and employees alike.

One View: At Last, Firms Will Have Affordable Options By Jonathan Gruber, professor of economics, Massachusetts Institute of Technology

Small businesses have long faced a predicament with health insurance. The Affordable Care Act helps them solve it.

Many firms want to offer coverage. It's a good way to attract and retain workers, plus owners care about the well-being of their employees. On the other hand, it's costly and complicated, and premiums can vary enormously from year to year, as employees age or become sick.

The act will help small employers that want to offer insurance, and open up new options for the few that don't. …

Another View: It Will Make It Harder for Small Firms to Grow By Michael D. Tanner, senior fellow at the Cato Institute

Nearly half of small-business owners believe that the Affordable Care Act will hurt their business, according to a recent Gallup poll. The evidence strongly suggests that they're correct.

Let's start with the most obvious and onerous mandate: Companies with 50 or more workers must provide insurance or pay a fine. That has an immediate effect--raising the cost of employing workers without delivering any benefit.

It also has a long-term effect on the plans of smaller firms and on the economy. Most small companies aspire to become bigger companies. Now the cost has been increased significantly. …

Click here to read the complete WSJ report.