Maggie's Farm

The propaganda issued by the Obama administration to obtain support for ObamaCare is blatant and wrong. An example is touting that ObamaCare has helped small businesses to obtain medical insurance. The federal Department of Health and Human Services cites a Democrat-front organization. The real facts say otherwise.

The federal Department of Health and Human Services website HealthCare.gov offers this “fact”: “According to a new survey from the Small Business Majority, one third of employers that don’t offer health insurance said they are more likely to do so because of the small business tax credits included in the Affordable Care Act, which help small employers afford coverage for their employees.”

But, as an expose in the New York Times says, “As far as the Agenda knows, the Small Business Majority research is the only research that has found that small businesses buy in to pay-or-play. All of the other small-business advocates claim the opposite, and by greater margins.”

What is the Small Business Majority? According to the New York Times expose:

The group has been around since 2004, founded by a tech entrepreneur named John Arensmeyer….Small Business Majority has no membership — if it did, Mr. Arensmeyer says, it could no longer objectively represent all of small business, since memberships are by definition self-selecting. Nor is it funded by small businesses; instead the organization depends almost entirely on foundation grants…. Small Business Majority is nonpartisan only in the most technical sense, in that it is not formally allied with any party. Informally, however, it is allied with the Democratic Party. Mr. Arensmeyer serves as a board member of the Bay Area Democrats, which describes itself as “a network of private citizens active in national Democratic Politics.” Since 2002, Mr. Arensmeyer has given generously, and exclusively, to Democratic candidates, according to F.E.C. records. (“I’ve voted for Republicans,” he offers.)… But when Mr. Arensmeyer insists that his organization is not ideological, he appears to mean that it is not “conservative.” The whole project, frankly, seems fundamentally ideological, and clearly liberal. It’s received a leg up from Demos, the advocacy group that counts among its objectives “a more equitable economy with widely shared prosperity and opportunity” — no initiatives to foster Ayn Rand-style self-reliance here. (Demos serves as a fiscal agent, which allows the group to raise money as a 501(c)(3) nonprofit.)

In Business Week, Prof. Scott Shane, of Case Western Reserve University, lays out the reality:

Sellers of small group policies report little change in demand for employee health insurance policies among small business owners. The sellers explain that compensation limits for employees make few small businesses eligible for the credit and that the low value of the credit does little to get business owners to provide employee health insurance.

The Kaiser Family Foundation reports that the uptick in the share of firms offering employee health insurance is an artifact of high failure rates of the most vulnerable small businesses (which tend not to offer employee health insurance) during the economic downturn. With more of the companies not providing insurance out of the sample, the share of those providing insurance has increased for purely mathematical reasons….

Another claim is that the new law is bringing down health insurance premiums. Even if the law might, possibly, maybe, at some time in the future, bring down premiums, it hasn't done that yet. Trade publication Employee Benefit News explains that private companies' spending on health insurance is expected to have increased by 4.3 percent in 2010, a rise from the 2.5 percent expected the month before the PPACA was passed because of changes in COBRA policies….

So why am I challenging the claims of the law's cheerleaders? Because its effect so far has been a net negative. That's because many business owners have formed negative expectations of the future effects of the law. For instance, a survey of 459 businesses conducted by Fidelity Investments in June revealed that 49 percent of small employers expect the new law to increase their costs. Many small business owners are responding to these expectations by passing on health insurance costs to employees, by changing the type of insurance they offer, and by planning to drop employee health insurance coverage in the future.

As to the reduced workforce, this USA Today study points out that employment recovery from this recession is slower and less than from prior ones: “This year's hiring should lower the 9.8% jobless rate to 8.9% or so by the end of the year, Moody's Analytics says. That would still leave about 13 million Americans jobless by year's end and many economists say it will take at least five years for unemployment to return to its normal 5% to 6% rate.”

Why are firms either not hiring or limiting hiring?

The President of the US Chamber of Commerce knows the primary reason, excess regulations and taxes sapping the ability and willingness by entrepreneurs to start or stay in business, or by businesses to expand employment or to retain benefits programs. ObamaCare, for example, “creates 159 new agencies, commissions, panels, and other bodies. It grants extraordinary powers to the Department of Health and Human Services to redefine health care as we know it.”