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Marketplace of Ideas: Two myths about ObamaCare and small business

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  • | 8:07 a.m. August 10, 2012
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There's been a lot of discussion lately among media pundits over Gov. Rick Scott's claims that the Patient Protection and Affordable Care Act, aka ObamaCare, will raise health care costs and hurt the economy.

If you only read those news reports, you'd never know small business job growth is again on the decline, and that more than 70% of Florida's small businesses don't plan on hiring new workers in the next six months.

Small and startup businesses are key to turning Florida's economy around. Until we repeal its regulations, tax hikes, and subsidies, ObamaCare will continue to strangle job creation.

Here are two big whoppers about ObamaCare and its impact on jobs, small business, and the economy.

Whopper #1 - Only big businesses are subject to ObamaCare's regulations.
As highlighted by the recent Rick Scott-Dairy Queen flap, ObamaCare's employer mandate — which forces business to provide government-approved health insurance, or else pay a fine — only affects employers with 50 or more workers.
But the mandate also impacts growing small businesses fearful that each new employee brings them closer to the dreaded mandate. Think of a business employing 49 people. Would that business owner hire worker No. 50 with looming ObamaCare-induced costs?
ObamaCare imposes a host of other regulations that create economic uncertainty and drive up the cost of doing business. Six months after the law was signed, small businesses that did offer coverage were forced to purchase policies with no lifetime limits and coverage for “children” up to age 26 — mandates that hike premiums and could force employers to drop coverage entirely. Last year, ObamaCare forced businesses to start reporting the value of employee health benefits on W-2 forms.
And the hits just keep on coming. Next year, a new Medicare payroll tax goes into effect for people making more than $200,000 annually, which even the law's supporters say could affect 174,000 small business owners. In 2014, small businesses will disproportionately bear the brunt of a new $8 billion health insurance tax—and they'll be forced (along with everyone else who buys health insurance) to purchase a federally defined “essential benefits package” larded with things they might not want or need.

Whopper #2 - ObamaCare's tax credits help small businesses provide health insurance coverage.
The law also offers new small business tax credits that cover up to half of employee health costs. If you're a small business owner with 25 or fewer workers with an average wage of $25,000 to $50,000 — and if you pay for at least 50% of those workers' health care costs and purchase their coverage in a health insurance exchange — then congratulations, you get a sliding scale tax credit that expires in 2015.
Sound confusing? That's because it is. Only a fraction of small businesses would be eligible for this temporary tax credit to begin with, and they'll quickly lose those federal subsidies if they hire too many workers, or if they give their employees raises. Not the best way to grow jobs and the economy.
Small businesses that are eligible for the tax credit must run the federal qualification gauntlet to get the money. In March, the Congressional Budget Office actually cut in half the projected cost of ObamaCare's small business tax credits, saying that “small businesses have been slower to take advantage of the credits than originally estimated.”
Recent polls show that 46% of Americans think ObamaCare will hurt the economy, and that half of Floridians still want the law repealed. Americans have fact-checked President Obama's health care promises and have found them wanting. Let's hope the punditry does the same.

Christie Herrera is vice president of policy at the Foundation for Government Accountability, a Naples-based free market think tank.


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