ObamaCare and Small Business


Starbucks CEO Howard Schultz supported last year's health care overhaul before it passed, and he still praises it as well intentioned. But these days, he's become worried about the law's effect on business. Here's what he told The Seattle Times:

"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," he said. "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.

Estimates from the Urban Institute, a left-leaning think tank that is generally favorable to ObamaCare, indicate that medium-sized businesses (those with 100-1000 employees) will pay $11.8 billion in new penalties under the law, and that businesses with between 80 and 100 employees will pay approximately $2 billion in similar penalties when employees end up purchasing health insurance through the law's new exchanges. Supporters of the law note that small business tax credits will help some tinier shops purchase coverage, and that in the context of overall wages and salaries for medium sized businesses, the penalties won't be big enough to have a significant detrimental affect. But given that the penalties are likely to be concentrated amongst a relatively small percentage of employers, it's reasonable to suspect that they'll end up significantly and disproportionately hurting some specific types of businesses—likely those with low margins that struggle to keep employee costs down. Regardless, I'm skeptical that saddling employers with nearly $14 billion in new penalties is the sort of policy that's likely to make it easier to do business in an already difficult economy.