Health Care Law Imposes Great Pressure on Small Businesses

Mar 22, 2011

A day before the one-year anniversary of the health care law, Starbucks chief executive Howard Schultz said in an interview with the Seattle Times that he’s now worried about what will happen when the health care law takes full effect in 2014:

We have faced double-digit increases for almost five consecutive years with no end in sight.

There's no plan that would be a perfect plan, but the intent of the bill and the heartfelt commitment to insure the uninsured is the right approach. I think as the bill is currently written and if it was going to land in 2014 under the current guidelines, the pressure on small businesses, because of the mandate, is too great.

Schultz isn’t the only business leader waiving the caution flag. On a press call yesterday hosted by the U.S. Chamber, two small business owners echoed similar concerns.

Brett Parker, vice chairman and CFO of Bowlmor Lanes, said “to minimize losses sustained due to this mandate, we will have to keep employees part-time, not allow them to work 30 hours a week. We will be forced to do this as much as possible in order to reduce the number of full time workers. We are very unhappy about the effects this will have on our employees, but we are left without a choice.”

Bill Feinberg, president of Allied Kitchen and Bath, Inc., said “with this mandate, it’s going to hurt creating jobs for my company.  If we take on more employees, and we increase to 50 employees, I definitely would have to think about how I would restructure my company or just not be able to take on that 50th employee because I would enter this realm of mandates, I would face steep fines.”

These comments refer to a provision in the bill that requires businesses with 50 or more employees to offer government-mandated levels of coverage, or to pay fines. Many businesses that offer qualifying coverage will still be fined under this provision.

When businesses look at the costs and fines imposed in this law, they have decisions to make. Brett Parker said it well,

“We can either continue to grow at a fast rate and create an enormous amount of jobs or we can bear the cost of this health care bill and pay for all this insurance. But we cannot do both. So Congress and people out there need to look at businesses like ours and say, OK, we can have jobs or we can have health care. Which of those two provides a higher utility to our society? And I feel very strongly that providing jobs and good-quality jobs with a lot of upside potential which these all are in my business, that is the best thing I can do for the world.”

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