Let the Affordable Care Act Pass So Businesses Can Keep Running
Right now things in my life are kind of uncertain.
A big project we're working on is reaching its budget limits and I'm concerned we won't get it done profitably. Microsoft is coming out with a new version of a product we sell (with new pricing) that's concerning my client base. My kids all went off to college only a few weeks ago and the first tuition bills are coming any day now. My partial season ticket plan for the Phillies was a complete waste of money and now I'm being asked to buy a plan for next season. (Where has my 2008 team gone?) What exactly is that new pain I'm now feeling in my lower back? And how am I going to fill up the time once Breaking Bad ends?
Oh, and then there's the latest fight in Washington. More uncertainty. And it's coming from my own guys.
I'm a Republican and I'd like better healthcare reform, too.
I'm a Republican. I don't drive a pickup truck, I don't belong to the NRA, and I don't listen to Ted Nugent. I'm not a religious guy, except when it comes to baseball. I'm not as right as the Tea Party but I am right of center. I voted for Romney. I read the The Wall Street Journal. I disagree with much of President Obama's economic policies. But the Republicans are disappointing me right now. They are tying the passing of a spending bill so that the government can stay open after September 30th to the de-funding of the Affordable Care Act (ACA). As a business owner I say: It's not good, it's not helpful, and it's not realistic.
Most of the business owners I know don't like the ACA--but not because of its intentions. We all want affordable healthcare for everyone. A great society like ours should have a good health system. No one argues that point. And why would a small business care? If you've got fewer than 50 full-time equivalent employees, like just about all of my clients, you're completely exempt from the regulations. You don't have to provide health insurance at all. You pay no penalties. In fact, if you've got fewer than 25 people and you pay an average salary of $50,000 or below, then you may even be eligible for a tax credit on your current healthcare premiums. That's great stuff. So why would a small business owner be against the ACA?
The law's too partisan and too confusing, but it's the law, so let it go.
It's because the law is not a great law. It was voted entirely by party lines. It's an enormous, confusing, and complicated bill. There are many contradictions and issues. It's just too much to do in too little time. The business owners I know would never have gone forward with such an enormous project in their own companies without better information, more accurate numbers, and a reasonably calculated return on investment.
None of this was evident when the bill was passed back in 2010. Too many questions linger. And the consequences (i.e., higher taxes) could be enormous. Businesspeople hate taxes. Our taxes are high enough. We're concerned that this giant bill was not appropriately thought out and that it may cost us dearly in the years to come.
But here's the thing: The ACA was passed into law by an elected Congress. It was signed by our elected President. The country democratically put these people there. In 2010, the Republicans failed to win back the Senate on a mid-term election campaign where the ACA was its primary platform. Then, in 2012, President Obama was not only re-elected but the Democrats continued to hold on to their Senate majority even again as healthcare was one of the top issues.
The Supreme Court has ruled on its legality. Billions have already been spent. The exchanges will be live in a week. The healthcare consulting industry is partying hard. Many of the essential benefits required by the law have been put into place by the insurance industry. And on January 1st the boom comes down: Everyone must have health coverage or face a fine.
In other words: the ACA is law. It's been legally and judicially challenged. But it's still law. Business owners know it. Many don't like it. But there are two things we like even less: surprises and uncertainty. Which is why the Republicans are not helping my clients and me. By tying a de-funding of the ACA to keeping the government from shutting down, they are creating enormous uncertainty.
The impact of a government shutdown on small businesses is major.
A government shutdown would be bad for many small business owners. These are the guys who have Federal contracts and who are operating on thin margins where non-payment for only a few weeks could be catastrophic. Or they are the people located in areas where Federal spending is higher. Or they have family members that work for the government. Or they have customers all around the world and significant travel requirements that could be hampered.
And if, beyond the shutdown, if our debt ceiling is not raised, the consequences become even more significant for small businesses. A drop in our credit rating could significantly hurt financial markets and cause an across-the-board increase in the cost of borrowing. Our stock market, which is based so much on psychology, could drop. And trust me, my clients only buy software from me when they're feel comfortable that they can afford it. A lower stock market makes them all feel poorer and holds back their spending. There could be indirect effects on the value of our dollar, which hurts businesses that buy overseas. The Fed may be forced to continue its easing in order to stimulate an already slow economy--and while economists may argue over the long-term effects, no one truly knows what how it may pan out. It could all be far worse than the effects of healthcare reform.
So even as the business community may be frightened by the long-term effects of a shutdown on the economy, we can at least budget for the effects on our businesses. Many large companies, from Walmart to IBM, are already making moves to counter these effects. Most of my clients are considering their options, too--do they continue to offer coverage, change plans, drop coverage entirely, and pay the fine? Or do they start up one of those defined contribution plans in which their employees get their insurance from an exchange and the company reimburses them?
Go fix the deficit and keep the government running so we can fix our other daily disasters.
These are options based on the facts we have today. We will decide. We will take action. We will pay any additional costs if there are such costs. And if there are such costs, we will build them into our pricing. We have costs all the time. Smart business owners make adjustments to accommodate and move on to the next disaster from there. That's what our lives are like.
So to my fellow Republicans in Washington: We can deal with the ACA. We'll be okay. Let us handle it. Here's your job: Go back and figure out another way to reduce our government's soaring deficits. Here's a hint: social security, Medicare, and Medicaid. That'll keep you busy for a while. And that way we can keep busy, too.
Can I interest anyone in a couple of Phillies 2014 season tickets? Cheap?
GENE MARKS | Columnist | Owner, Marks Group
Gene Marks is a columnist, author, and small-business owner. He oversees the Marks Group, a 10-person technology consultancy to small and medium-size businesses. A certified public accountant, Marks has also worked in the entrepreneurial services arm of KPMG. He writes for The New York Times, Forbes, and The Huffington Post.