Hadley Heath

While many issues will help drive voters to the polls this November, two hot topics stand out as key motivators in this midterm election: the economy and health care reform. In fact, a recent poll of independent voters from Independent Women’s Voice revealed that 68 percent said the economy was on the wrong track and 73 percent wanted candidates to support the repeal of the new health care law.

Ironically, these two issues are closely tied: Without repeal, businesses will face new burdens that will discourage job creation and economic growth, prolonging our current economic malaise.

Business and health insurance have been intertwined for decades. In the 1940’s, the federal government prevented employers from raising wages, so businesses had to find other ways – such as providing benefits like health insurance – to attract quality employees. Today, about two-thirds of Americans under the age of 65 have employer-provided insurance.

For years, costs to employers have been rapidly increasing, which is one reason politicians have made health insurance reform a priority. Unfortunately, the legislation passed in March, which is today commonly referred to as “Obamacare,” won't give businesses relief. Instead, businesses are finding that the new law will add to their burdens by increasing health insurance costs, limiting their flexibility, and creating complicated new paperwork burdens.

For starters, not all employers can afford to provide employees with health care coverage. As a result of this new law, employers with 51 or more full time employees will be required by law to provide adequate coverage or pay an annual penalty of $2,000 per worker in excess of thirty workers. So, a business of 51 workers that can’t provide coverage will face a penalty of $42,000.

While reform was supposed to encourage employers to provide better benefits, it instead creates incentives to dump health benefits altogether. Those firms with fewer than 50 employees face comparatively minor penalties for failure to provide insurance. In fact, the best cost-reducing strategy for some will be downsizing their staff and outsourcing work—not exactly what Americans are hoping for given our current high levels of unemployment and sluggish economic growth.

Hadley Heath

Hadley Heath is a Policy Analyst at the Independent Women’s Forum.