1. The Economic Impact of Healthcare Reform on Small Businesses
Thesis: In the face of new healthcare mandates created by the Small Business Health Options
Program (SHOP) Act of 2009, the costs of providing required medical care will force small
businesses to make employee healthcare coverage choices which will impact job growth.
I. Small businesses must weigh the difference between the cost to offer coverage and the
government fine for non-compliance.
A. Small businesses who offer coverage must cover no less than 72.5% of the
cheapest health plan offered for individuals, and no less than 65% for families.
B. In addition, employers must automatically enroll every employee in a health plan
with the lowest employee premium - unless they opt out.
C. Small businesses who do not offer coverage must pay the Health Choices
Commissioner (SHOP Plan) 8% of average wages paid during a predefined
period.
D. Small businesses that fail to provide coverage or pay SHOP fees will be fined
$100 per violation day.
II. Fewer incentives for entrepreneurs to grow their business will have a negative impact on
hiring and productivity gains in the United States.
A. Small businesses that employ less than 50 people (one of the thresholds in the
legislation for tax penalties and compliance requirements) are holding off on
hiring any new employees until they can get a better handle on what their costs is
going to be under the new legislation.
B. Small business owners may decide not to grow their human capital merely to stay
below the 50 employees to avoid the mandate.
C. If small businesses don't expand, the economy could be impacted with lower
expansion and growth, which will trickle down to lower hiring rates and GDP
growth.
III. Driving growth and innovation, small businesses play an important role in the United
States economy. Small businesses are now faced with healthcare coverage decisions that
will not be helpful to the current employment situation in the country.