Stay current on 'Obamacare' as it pertains to your business. But wait until November to make any moves. Here's why.
"I like the name 'Obamacare.' This law is here to stay." --President Obama at a pre-convention rally on Sunday.
"I will repeal 'Obamacare.'" --Mitt Romney at last week's Republican National Convention
"My health insurance bill is...WHAT?" --millions of small business owners at various times in 2012
The Affordable Care Act, otherwise known as health care reform, otherwise known as Obamacare, is of course a huge topic during this year's election. And with the recent Supreme Court ruling that validated the legislation's constitutionality, it's full steam ahead for President Obama. Which means potential big changes for all business owners, big and small. Or not. Not yet.
A quick recap of these changes because you'll never hear this enough:
1. If, like me, you employ fewer than 50 full-time equivalent people (and let's not get into THAT calculation right now), you are not required to offer employees health care insurance. But the law still affects you. And mostly in a good way. Sure, you will all be personally required to have our own health coverage--or incur a penalty of up to 2.5% of our adjusted gross income. That's the mandate. If you do choose to provide qualified health insurance for our employees, then you may be able to benefit from a tax credit. And regardless of where your insurance comes from, the law now requires carriers to make available a host of extra benefits, like covering people with pre-existing conditions and dependents up to the age of 26, wellness programs, and diagnostic testing.
2. If you employ more than 50 full-time equivalent people, you will be required to provide qualified health insurance for your full time employees. If you don't make it available, you'll be fined up to $2,000 for every employee with no coverage. Actually, even if you do offer health insurance, but your employees get subsidized coverage on their own from a state exchange (more on this in No. 3), your penalty may be as high as $3,000 per employee. There's more to this calculation. But you get the idea.
3. Individuals and business owners will have the opportunity to purchase health insurance through state-operated "exchanges." Picture iTunes, but instead of downloading Beyonce's latest hit, you'll buy a health insurance plan. It won't be $0.99, but the government has assured you'll have plenty of choices at lower costs than you pay right now. That's because insurers will compete against each other to offer plans on the exchanges, and their potential market of customers will be expanded to include the more than 32 million people who currently don't get health insurance at all. The government will help out those who can't afford it, and fine those that can, but still don't buy.
This is what's happening right now. It's the law. It's reality.
As I write this the wheels are turning. Teams of lawyers at the Department of Health and Human Services are filling in the details to this massive legislation (and many details are still yet to come). Billions are being spent to help states get their exchanges up and running. Physicians and other health care practitioners are bracing for changes in the way they bill and provide service. The owners of health benefit firms are consuming massive quantities of Xanax and stuffing money in suitcases for their upcoming trips to Switzerland and Bermuda. Medical device and pharmaceutical manufacturers are huddling together to devise crafty new ways to price their products that will take into account the new taxes levied on their businesses by the legislation.
But wait. Like that terrifying situation in Batman Begins, just when you thought that all was lost and Ra's al Ghul's plot to destroy Gotham City by vaporizing the water supply into gas laced with the Scarecrow's fear-inducing toxin would cause its entire populace to go insane, Batman intervened. This is the situation we are in. Please don't get the wrong idea: Mitt Romney is no Batman (although Paul Ryan wouldn't be a bad Robin). But if Governor Romney wins the November election he will intervene. He has promised to stop the legislation. And you know what? He can do that.
President Obama did that with former President Bush's "No Child Left Behind" legislation. That was the bill passed in 2001 to mandate, among other things, standardized testing in our public schools. Senator Obama campaigned against the legislation. And even though President Obama didn't have the Congressional votes to overturn it, he did have the power to effectively sabotage it. He allowed the Department of Health and Human Services to issue "waivers" to those states that didn't want to implement the legislation, which effectively allowed schools in those states to ignore it. A newly-elected President Romney could do the exact same. His Health and Human Services department could allow states to legally wiggle out of the requirement to create exchanges or comply with other aspects of the Affordable Care Act. Some states have already opted out of the Act's required expansion of Medicare after the recent Supreme Court ruling allowed them to do so.
And, assuming he has the 51 filibuster-proof votes needed in the Senate, and maintains a majority in the House, a President Romney can then go to town on the Affordable Care Act--not by overturning the legislation, but by taking away its teeth through budget cuts. Which means that line items that fund the most essential parts of the legislation would be taken away, effectively halting the process altogether. The mandate would still be in place. But if many states aren't participating and most of the key parts of the legislation go unfunded and stagnate, it's unlikely that the Democrats will continue to push for penalties on those that don't have the coverage. And without the funding, who's going to audit all those people and enforce the law anyway?
Even Ezra Klein, one of my favorite journalists and a long-time advocate of Obamacare (although he considers the legislation to be imperfect and needing improvement) admits that "if Mitt Romney wins the election and Republicans take control of the Senate, they should repeal the Affordable Care Act. At that point, they will have won two straight elections atop a platform in which repealing the [Affordable Care Act] was a central, explicit promise. The American people will have spoken with unusual clarity, and part of what they will have said, whether they meant to say it or not, is repeal the [Affordable Care Act]."
What does this mean for small business owners like me? It means: wait. Again.
Wait until November. Make no moves. Watch carefully. Stay current on the health care reform issues as they impact your businesses. And get ready to take action.
Because if President Obama wins another term it's full steam ahead with the Affordable Care Act. And you will have lots of decisions to make before January 1, 2014. It will not be business as usual for many. And few truly know whether the outcome will benefit or harm small business owners over the long term. But smart business people will adapt and comply, and figure out the best plan for their companies.
That said, if President Obama loses and the Senate turns Republican, then a whole new set of rules will apply. And the Affordable Care Act will inevitably be halted in its tracks. Which means status quo. Confusion. Rising premiums. You know, the good old days. And the business community will once again have to watch from the sidelines as Washington tries to figure out a better solution to our health care problem.
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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.