How the Implementation of Obamacare Will Make the GOP a Majority Party
November 24, 2012 - 10:48 am
As we get closer to the day when Obamacare moves from threat to reality, it seems probable that the resulting catastrophe for tens of thousands of businesses, as well as the massive increase in premiums for many families, will propel Republicans to majority status in 2014.
How many businesses will be forced to close shop? How many will cut back on the number of employees to stay in business? How many will refuse to expand, unable to handle the increased costs?
How many jobs will Obamacare cost?
Michael Tanner, senior fellow at the Cato Institute, lays out the grim reality:
Under ObamaCare, employers with 50 or more full-time workers must provide health insurance for all their workers, paying at least 65% of the cost of a family policy or 85% of the cost of an individual plan. Moreover, the insurance must meet the federal government’s requirements in terms of what benefits are included, meaning that many businesses that offer insurance to their workers today will have to change to new, more expensive plans.
ObamaCare’s rules make expansion expensive, particularly for the 500,000 US businesses that have fewer than 100 employees.
Suppose that a firm with 49 employees does not provide health benefits. Hiring one more worker will trigger the mandate. The company would now have to provide insurance coverage to all 50 workers or pay a tax penalty.
In New York, the average employer contribution for employer-provided insurance plans, runs from $4,567 for an individual to $ 12,748 for a family. Many companies will likely choose to pay the penalty instead, which is still expensive — $2,000 per worker multiplied by the entire workforce, after subtracting the statutory exemption for the first 30 workers. For a 50-person company, then, the tax would be $40,000, or $2,000 times 20.
That might not seem like a lot, but for many small businesses that could be the difference between survival and failure.
Under the circumstances, how likely is the company to hire that 50th worker? Or, if a company already has 50 workers, isn’t the company likely to lay off one employee? Or cut hours and make some employees part time, thus getting under the 50 employee cap? Indeed, a study by Mercer found that 18% of companies were likely to do exactly that. It’s worth noting that in France, another country where numerous government regulations kick in at 50 workers, there are 1,500 companies with 48 employees and 1,600 with 49 employees, but just 660 with 50 and only 500 with 51.
New York City’s small business could be particularly hard hit. Of the 238,851 city firms included in a state Department of Labor survey, 96% had fewer than 50 employees. How many of them, given the chance to expand, will look at the mandate and decide they’d rather keep their small business small?
Overall, according to the Congressional Budget Office, ObamaCare could end up costing as many as 800,000 jobs.
You read that correctly: 800,000 jobs. And that’s according to the CBO, a notoriously conservative outfit when it comes to projections. (Its current estimate of Obamacare’s cost from 2014-2023 is $2.6 trillion.)
Individuals and families who will be forced to buy their own insurance when companies drop their health insurance plans will be in for a shock. Even with subsidies, some families will end up paying nearly 10% of their gross income for health insurance.
The bottom line is mass confusion. Put simply, the American people are unprepared for such a massive change in their lives. Most people don’t realize that their current insurance coverage is inadequate. They actually believed the president when he looked into the cameras during his 2010 State of the Union address and assured citizens that they could keep the insurance plan they have now. Instead, government-mandated coverage for a wide variety of services that many current insurance plans don’t cover will radically alter health insurance for millions.
Many economists are already predicting a recession as a result of implementing Obamacare. Coupled with voters doing a slow burn over the sheer complexity and maddening bureaucracy that will come with Obamacare, the Republicans, if they play it right, should find themselves in an excellent position to put a stranglehold on Congress and set themselves up for an excellent chance to win the White House in 2016.
The GOP will be blameless in this fiasco. The warnings from Republicans since Obamacare was first proposed about the consequences of the law will make the party seem like soothsayers. The Democrats will be forced to defend a law that caused a recession, significantly increased insurance costs to families, and brought many businesses to their knees. It’s hard to see how the elections of 2014-16 won’t severely damage the Democrats and make them a minority party for the foreseeable future.