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Obamacare is Stalling the Engine of America

Created: 20 December, 2013
Updated: 13 September, 2023
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3 min read

The Affordable Care Act (ACA) is being described as one of the biggest threats small business faces today. However, entrepreneurs are not against health care reform; they are simply asking for a tune-up or common sense fixes, not a complete overhaul.

Small businesses are the engine of our nations economic prosperity. They employ millions of Americans and create nearly two-thirds of all net new jobs. And they represent the most significant sector of our economy.

For many years, I have served in both the public and private sector. As former head of the Small Business Administration, I learned about the challenges and desires of aspiring entrepreneurs and established employers regarding the tools necessary to start or grow an existing enterprise. But the biggest concern for these small business owners was health care and their options.

They were worried about escalating premiums, limited choices and inflation of costs due to frivolous lawsuits. In fact, the Employee Benefit Research Institute estimates that of the 45 million uninsured Americans, 22.3 million are self-employed or work for small businesses without benefits.

Initially, Obamacare was sold as a new and less expensive option for insurance provided through health exchanges. But the reality is that from small startup companies to large corporations, employers have more rules that keep changing and confusing requirements to keep track of. For most, costs are increasing and options are decreasing.

The Affordable Care Act is supposed to provide more plan options and rein in health care costs with competitive prices.

Yet, small businesses are now being forced to comply with burdensome regulations and pay more taxes and fees. Companies employing 50 or more workers, who work more than 30 hours per week, are forced to provide them with mandated health insurance. And to make matters worse, the tax credit they were promised for up to 50 percent of their health care premium costs is only available if you have 10 or fewer full-time workers with a salary of less than $25,000 a year.

In essence, Obamacare is increasing small business costs, contributing to more of a part-time employee workforce and is causing hiring freezes in the sector of the economy that contributes to this nations overall financial prosperity.

Today, small business isn’t buying the promise of the Affordable Care Act.

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A recent Public Opinion Strategies survey of more than 400 business owners with 40 to 500 employees states that 64 percent of small business franchise owners believe the law will have a “negative impact” on their business. And more that one in four businesses (28 percent) say that in 2015, when the employer mandate is scheduled to take full effect, it is “likely” they will drop their insurance coverage and pay the penalty per employee.

This widespread anxiety is causing small businesses to be stymied because of over-regulation and economic uncertainty. And unfortunately, like bad fuel in an engine, if the rollout for the employer mandate is anywhere as grim as the individual mandate rollout, small businesses will continue feeling angst, uncertainty and the stagnation they have been experiencing for years.

This is not what American entrepreneurs hoped for, or expected.

We are looking for a real solution that will control spiraling health care costs and effective options, which have long been a worry and a source of anxiety for small business. We are asking for more health plan options and a real cost curve reduction in premiums that continue to spike up.

In short, we need and demand options, not mandates or a government takeover for millions of small businesses in the U.S. Small businesses deserve for their voices to be heard. Small business not only will lead our nation out of this economic morass; they will be pivotal in the expansion and growth of our economy for generations to come.

Is anyone listening?

Hector Barreto is the former head of the Small Business Administration (2001 – 2006) and currently serves as the Chairman of The Latino Coalition.

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