Those employers who are providing coverage are likely to find their health care costs will rise as new government mandates kick in. The law bans lifetime and annual maximums, cost-sharing for preventative services, and requires insurers to provide coverage for pre-existing conditions and allow single, adult children to remain on their parents’ insurance plan up to age 26.
These are just the first of the new requirements, since the government will be free to determine what insurance is considered “adequate.” Requiring more generous plans will send prices up. In fact, Mercer, a leading global health benefits consulting firm, determined in its 2009 National Survey of Employer-Sponsored Health Plans that 62 percent of small businesses have at least one “red flag” in their current plans that violates the new mandates. This means these businesses will have to provide different coverage, in all likelihood paying significantly more, or face government sanction.
Businesses and individuals will also face a slew of new taxes to pay for the new law. Tanning salons are targeted for a 10 percent tax. There's also a new 0.9 percent Medicare surtax on high earners, which won't just affect “the rich,” but all of the small business owners who file under the individual income tax code.
Some supporters of Obamacare have said that new costs for business would be offset by tax credits for providing health insurance. Yet the tax credits last for a maximum of only 6 years and apply solely to businesses with fewer than 25 workers and with average salaries of less than $50,000. In addition to not providing businesses with much relief, this tax credit structure creates significant disincentives to hiring and raising wages because the credit decreases as the number of workers or their average earnings increase.
Furthermore, the law creates major new tax paperwork requirements. According to an estimate from the National Small Business Association , the new mandate that businesses file a 1099 form for every transaction in excess of $600 will mean that instead of filing an average of 10 forms a year, businesses will have to file 86. For some small businesses, this will mean having to hire an accountant, rather than handling tax forms in-house.
Proponents of the new law promised that it would lower health care costs while insuring more Americans. Unfortunately, businesses—and all the workers that depend on the private sector for jobs—are learning that this law is filled with provisions that raise the cost of doing business in the United States. It’s no wonder so many voters want it repealed.