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Surveys Say Obamacare Promises Uncertainty for Small Businesses in 2014

Posted By Bob Ogle, Tuesday, January 7, 2014

There’s little doubt that the drama over the Affordable Healthcare Act – "Obamacare” – will continue to play a major role in the U.S. political landscape in the coming year. With that in mind, two major questions loom over the discussion: Will the impact on small businesses be good or bad, and just how big of an impact will there be?

Recently released surveys of individuals and small businesses provide a glimpse of the future. For example, a survey by Merchant Cash and Capital, a financing company for small businesses, says nearly a third of respondents said they believe the health care law will hurt them, mainly by increasing their operational expenses. Perhaps not surprisingly, given the administration’s rocky rollout of the program, roughly 40 percent of small businesses are still uncertain about how Obamacare will affect them.

Much of the uncertainty comes from a lack of clarity from the government about a wide range of issues, including how to calculate the number of full-time equivalent employees they have. Federal regulators say that the hours worked by part-timers should be totaled and aggregated to determine the number of full-time equivalent workers, but the government has been clumsy at best (and totally ineffective at worst) in communicating that information to small business owners. As a result, businesses are uncertain how to make sure calculations are correct and whether they will pass the threshold that will require them to offer health benefits as mandated in 2015.

Mark Lowenstein, marketing director for Merchant Cash and Capital, recently told Inc. magazine that the lack of communication is creating a ripple through the business community. According to the survey, 1 in 5 businesses say they will put new hiring on hold until the ramifications of Obamacare become clearer, and 1 in 4 say that, at least for now, they will halt any growth initiatives such as opening new locations or expanding operations.

Another study recently released by the independent research organization NORC at the University of Chicago certainly underscores the notion of uncertainty. When 604 small businesses were asked if their insurers had changed their benefit package because of the law, 34 percent said they weren’t sure. Also, about 70 percent said they lack confidence that the government can make any progress in shoring up the program’s weaknesses.

A survey by Public Opinion Strategies leans towards pessimism, according to the Wall Street Journal. In a poll of 400 business owners with between 40 and 500 employees (on behalf of the U.S. Chamber of Commerce and the International Franchise Association), about 64 percent of small business franchise owners believe the law will have a negative impact on their business. For non-franchise businesses, the ratio was 53 percent negative and 12 percent positive. Only 1 in 12 thought Obamacare would "help” their businesses.

In a column for Bloomberg View, author and entrepreneur consultant Megan McArdle notes that proponents of Obamacare have long said it will unleash a wave of entrepreneurship, since people can start new businesses without the fear of losing health insurance. However, she says, it could very well have the opposite effect. For example, uncertainty could cause potential entrepreneurs to "throw up their hands” and go back to corporate jobs where benefits are firmly entrenched.

Ultimately, McArdle says, there’s just not enough evidence to gain a clear understanding of how the Affordable Care Act will ultimately have on entrepreneurship and small businesses. And if the surveys are any indication, she’s right: A good number of small business owners are uncertain, skeptical, or just downright pessimistic.

Tags:  business  health care  obamacare 

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