The late economist Herbert Stein famously said, “If something cannot go on forever, it will stop.” He might have well been talking about the president’s health-care law.
Since its passage, the badly misnamed Patient Protection and Affordable Care Act—also known as Obamacare—has creaked and strained under its own weight. Individual parts of the law have begun to fall away bit by bit, beginning with the untenable CLASS Act and then the onerous 1099 provision, while other pieces have barely hung on, as exemplified in the delay of offering options in the marketplace where small businesses can purchase insurance products.
A few weeks ago, Obamacare’s foundation cracked yet again, when the administration announced that it would delay until 2015 the implementation of the employer mandate and reporting requirements.
On its face, this latest delay marginally improves a bad situation: It provides those in the business community with an extra year to comply with a cumbersome and confusing element of the law. But delays are not long-term solutions. They do not solve the inherent problems of the employer mandate, nor do they solve the law’s other many problems, which extend far beyond the scope of this single troublesome element.
Millions of self-employed individuals and small-business employees will still be subject to the law’s much more expansive individual mandate, which requires nearly all Americans to purchase a health insurance plan or pay a penalty. Individuals and small businesses that provide health insurance must purchase government-sanctioned “essential health benefits” that will be more costly than the health-insurance benefits they currently use.
Beginning in 2014, the health-insurance tax (HIT), another problematic provision of the law that targets the fully insured marketplace, will increase the health-insurance costs of 1.7 million small businesses, 11 million employees, the self-employed who purchase in the individual market, and 23 million employees who are covered by their employers.
The endless stream of delays and capitulations -- not to mention new taxes and complicated regulations -- in Obamacare only add to the sense among many that this law is nothing short of a mess. Members of the small-business community -- the segment of the economy responsible for the majority of job creation and the sector that will be hardest hit by some of Obamacare’s most complex provisions -- have little reason to believe in the cost-reduction promises of health-care reform. Since the law was passed, the average reading for the NFIB Small Business Optimism Index has been 91.4 -- almost nine points below the historic average of 100 -- and its current trajectory is flat.
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