First: The logical question. How does Obamacare define “affordable”? The answer: Any healthcare plan that requires employees to contribute must be less than 9.5% of their gross wages. If those contributions exceed 9.5%, employers must pay a $2k/employee fine for each worker who rejects employer coverage and applies for Medicaid or subsidized coverage at HealthCare.gov.
Okay. The Motley Monk gets it. Employees must provide what Obamacare defines as “affordable” care or the federal government will through its exchanges. Employers will then be compelled under the duress of law to pay the federal government $2k/employee to lower the government’s costs of insuring the uninsured.
Why? During 2015, the Kaiser Family Foundation’s Employer Benefits Survey found that the cheapest coverage businesses offered single employees was high-deductible plans. The average cost of those plans: ~$5.6k.
The Motley Monk ran the numbers. The finding? Kaiser’s average cost for healthcare coverage is based upon an average salary of ~$59k.
Third: The economic impact. The economic impact of the Obamacare mandate is especially high for small businesses.
According to a New York Times article assessing the mandate’s impact upon a hair styling business whose owner wants to expand (READ: more jobs, more taxes, an expanding economic “pie”), her 4-salon business employing 45 workers (with no penalties) would earn as much as a 6-salon business employing 70 workers (with penalties). Expanding beyond 49 workers would make absolutely zero economic sense considering the higher capital requirements, increased exposure to risk, and workload involved in managing 6 salons with 70 workers for no increase in profitability.
Fourth: What all of this means.
- The New York Times’ assessment: Under the Obamacare mandate, no business employing low-wage/low-productivity employers would expand beyond 49 employees (READ: fewer jobs, lesser taxes collected, a fixed economic pie).
- The Motley Monk’s assessment: None of this is news. It was all reported when Obamacare was signed into law. But, the implementation of the mandate was delayed until 2016 in order to give time for the exchanges too get up and running. They have gotten up, but they aren’t running very well, according to the latest Real Clear Politics poll.
The folks don’t seem to be much pleased with what they’re receiving for healthcare coverage courtesy of Obamacare:
- higher deductibles;
- higher co-pays;
- impersonal attention; and,
- longer waits in physicians’ offices, among others.
All of this adds up to higher costs to those covered and less disposable income.
So much for the “low cost” and, for millions, “free” healthcare coverage!
In 1992, Gruber delivered a paper at the National Bureau of Economic Research in which he reported data demonstrating how employer mandates raise the cost of employing workers which, in turn, depresses wages and reduces employment.
More importantly, The Motley Monk must add, is the increase to the national debt as well as the inevitable increase in federal and state income taxes to fund the losing proposition that has come to be called “Obummercare.”
In short: Employer mandates tend to harm the people they are supposed to help and worse yet, President Obama knew this all along.
It’s almost 2016—an election year—and what Obamacare is set to do to the nation’s economy should be an issue of high priority to voters (not of the greatest urgency but pretty close considering what Obamacare’s economic impact will be over the long term). Hopefully, when more employees are forced into the exchanges in 2016 and discover what the price they’re having to pay, they’ll vote to “repeal” Obamacare and “replace” it with a market driven solution.
Let the discussion begin…
To read the souces identified in this post, click on the following links: