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On Small Business
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Posted at 04:40 AM ET, 07/02/2012

Small business opinion: Health-care law imposes costs that will deter hiring

While the Supreme Court’s decision upholding the Obamacare law may potentially benefit some people, this is not good news for me and other small businesses.

To preface, health-care premiums for my business have risen as much as 20 percent in a single year.  In the last two years, the increases have stabilized as we’ve become larger and more adept at seeking out cost effective plans.  

If I thought that this plan would result in decreased health-care premiums, I might support it, but there is no reason to think that it will do this.  One of the main reasons health care is so expensive in this country is the separation of the consumer from the price of the product. I asked one of my employees (whose wife just had a baby) what the cost of the birth was to the insurance company and the person had no idea.  

I asked if given a choice between a $1,500 delivery, a $5,000 delivery and a $20,000 delivery for the exact same service, which would he pick. The response was the $1,500 delivery, even if he wasn’t paying.

Separating the consumer from the product through the introduction of obfuscation by insurance companies and secondarily by having employers pay for insurance compounds the problem of creating ignorant consumers. This law fixes neither of those issues, and increases the problem by offering medical care to everyone, whether they could pay or not.

Another issue for small business owners is the increase in taxes.  Any additional tax on small business owners takes away money they could use to hire more employees.  We have always provided good health care for our employees, with 100 percent of the employee premium covered by the company.  Very low margin businesses such as restaurants, however, simply can’t afford to pay for health care for all of their employees.  Having them pay penalties will result in higher costs to the consumer as well as lower ability to employ people, since the cost per employee goes up significantly.

Finally, this was a partisan law, with all the special interest protections that come with that.  In full disclosure, I am a fiscally conservative, socially moderate independent who tends to vote Republican.  I had some hope for this law as it was being developed until one of the major union leaders came out of a meeting with President Obama and his staff crowing about how he had secured an exemption for unions from provisions of Obamacare and that “that was just the beginning.”  

Sure enough, there are exemptions and carve outs in the law protecting those who donated heavily to the Democratic Party.  If this had been a truly bipartisan law there may have been some hope of balancing the special interests, but even with huge Democratic majorities in the Congress and Senate, the law barely passed.  Any law that is purely partisan by definition was not created to benefit all the people, just those who primarily vote for those who passed it.

Eric Basu is the CEO and president at Sentek Global Inc., a San Diego-based provider of cyber security services and engineering services to the U.S. Department of Defense.

By Eric Basu  |  04:40 AM ET, 07/02/2012

 
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