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Affordable Care Act

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Posted

http://www.paulcraigroberts.org/2013/02/03/obamacare-a-primer/

 

Read.

 

When Republicans for ideological reasons blocked a single-payer health system like the rest of the developed world has and, indeed, even some developing countries have, the Obama regime, needing a victory, went to the insurance companies and told them to come up with a health care plan that the insurance lobby could get passed by Congress. Obamacare was written by the private insurance industry with the goal of raising its profits with 50 million mandated new customers. 
 
Obamacare works for the insurance companies, but not for the uninsured. The cost of using Obamacare is prohibitive for those who most need the health coverage. The cost of the premiums net of the government subsidy is large. It amounts to a substantial pay cut for people struggling to pay their bills. In addition to the premium cost, it is prohibitive for hard pressed Americans to use the policies because of the deductibles and co-pays. For the very poor, who are thrown into Medicaid systems, any assets they might have, such as a home, are subject to confiscation to cover their Medicaid bills. The only people other than the insurance companies who benefit from Obamacare are the down and out who are devoid of all assets. 
 
The whole point here, that everyone wants to miss because they are to busy playing party cheerleader, isn't whether the government can afford this program or not, it's that the American citizenry is getting fuged by capitalistic greed. The government can afford the costs of the program and all these bullshit scripted budget hostage crap is nothing but political posturing over votes and other extraneous nonsense. No one in government cares about what this plan is really about - squeezing every last bit of money from a populace who's median income hasn't risen in 25 fuging years. The entire argument is "Ohhh nooooo, we can't increase the deficit!!!!" rather than "Ohh no, this is bad for the average citizen!!!" or "This is nothing but a corporate Healthcare and Insurance sellout!!!!"

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I own a small business. I have employees. I pay my employees above average wages because I want them to stay with me and it actually costs me less to not have to retrain someone every 12 months. I am not at the limit yet, but were I to reach the employee limit that requires me to begin paying the extra premium I am now left with 4 options because I now have a huge expense added into my operating budget. 

 

1. I raise my prices to compensate. I now charge $150 for a service I provided last year for $120. Customer A looks at my price and at my competition who is under the employee limit and didn't have to raise his prices. My customer goes with my competitor because they are tight on funds and can't afford to pay more. I lose money. Since I can't lose money and stay in business I am now forced to.

 

2. Reduce my work force to below the required number of full time employees or

3. Reduce my full time employees to part time hours only or 

4. Realize that there is no way I can operate and close the doors for good laying off all my employees. 

 

These are my options as I see them. 

 

What I now can't do is grow my business because I am in effect penalized for being successful. I now have a very real ceiling where before I could grow as big as I could dream.

 

Now let's say I close the doors. The cost to insure my former employees now falls to someone else. ALSO any revenue the government would have received from income taxes is now gone.

 

50 people who were working and contributing are now unemployed and  are facing the task of trying to find another full time job, while draining resources via unemployment. 

 

To sum up how it's bad for me, it seriously affects my ability to grow my business and employ a work force.

 

I would say if you reach 50+ employees you really aren't a small business.  Like others, I'm curious how much the extra expenses are?  If you need more employees, aren't you growing anyway, and isn't' that more money?  Are the expenses from this and a new employee more than the added business you're taking?  I'm not really sure, that's why I ask, but congratulations for being successful and contributing with a great post.    Not saying this is you, but sometimes when I hear things like this I wonder if it's more of a case of "I'm going to make a bit less money now with these expenses" more so than a "crippled, can't grow" thing.

 

I'm mostly for this act but I can't deny it's confusing as a mofo, they really dropped the ball on explaining this.

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So what you are saying is that it actually helps small business owners! Because the law only requires businesses with 50 or more employs to provide coverage. 

 

Not at all. I am saying the exact opposite. For me, since I can't speak for other small business owners, this is a very bad thing.

 

When I decided to go into business 10 years ago, I sat down and had to consider all the things that I would be getting involved with. Taxes, insurance, employees, contracts, law suits, garnishments, child support, overhead, sleepless nights, worry, stress and all the other things that come with owning your own business. When I started my business I made a list of my goals and have been working since to achieve them. One of my goals was to become the biggest and best in my area. There is a specific company that I want to surpass to reach that goal. That goal is now gone. In order to move past that company, I have to cross the 50 employee limit. I'm not going there. At some point I'm sure that limit will drop to 40, then probably 25 or 30. 

 

The dream I had when I started is now attainable but only if I pay a penalty (as I see it) for success. If I feel that way, I'm sure there are others who are looking at going into business for themselves and asking themselves if they want to have to deal with this. There's enough stress running a company. To me, this discourages people from going into business because honestly, it's so much easier to work for someone else and not have to deal with all the BS.

 

My goals may be different than other small business owners. My goal is not to stay small, but turn this into something bigger and better. To me, this is like trying to compete with someone who works under the table. They can underbid me on everything because they simply don't have the overhead. Again, this is just how I see it. 

 

To answer the earlier question on where I got my figures, I got them when I spoke to my accountant. 

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I would say if you reach 50+ employees you really aren't a small business.  Like others, I'm curious how much the extra expenses are?  If you need more employees, aren't you growing anyway, and isn't' that more money?  Are the expenses from this and a new employee more than the added business you're taking?  I'm not really sure, that's why I ask, but congratulations for being successful and contributing with a great post.    Not saying this is you, but sometimes when I hear things like this I wonder if it's more of a case of "I'm going to make a bit less money now with these expenses" more so than a "crippled, can't grow" thing.

 

I'm mostly for this act but I can't deny it's confusing as a mofo, they really dropped the ball on explaining this.

 

I don't have the exact numbers right in front of me but I'll break it down as best I can generally. 

 

Business makes 5 million a year gross. After taxes and expenses, there is 1 million profit. From this 1 million profit, 70% is reinvested into the business, and the remaining 300k is the owners "salary." 

 

In order to remain competitive, business needs to hire 1 more employee bringing the total to 50. ACA now kicks in. For each employee an employer contribution of $500 is required per employee (again, I'm putting a number out there for example). The employers overhead has now climbed $25k per month. Is that employee bringing in an extra $25k in pure profit per month? Probably not.

 

We will keep the number at 5 million gross because this move was made to remain competitive. Instead of 1 mil profit, there is 700k. The reinvestment  into the company is now 490k, 210k less than before and the owners salary has dropped 90k a year. Again, no new significant income, but 300k has now been pulled out. 

 

So what this example breaks down to is, to go from 49 to 50 employees is going to cost 300k. At that point, my earlier post comes into play. And when you're in a business where you can lose a contract because of being $500 more than someone else, that cost is much larger than it looks. Crossing that threshold is huge.

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http://www.paulcraigroberts.org/2013/02/03/obamacare-a-primer/

 

Read.

 

When Republicans for ideological reasons blocked a single-payer health system like the rest of the developed world has and, indeed, even some developing countries have, the Obama regime, needing a victory, went to the insurance companies and told them to come up with a health care plan that the insurance lobby could get passed by Congress. Obamacare was written by the private insurance industry with the goal of raising its profits with 50 million mandated new customers. 
 
Obamacare works for the insurance companies, but not for the uninsured. The cost of using Obamacare is prohibitive for those who most need the health coverage. The cost of the premiums net of the government subsidy is large. It amounts to a substantial pay cut for people struggling to pay their bills. In addition to the premium cost, it is prohibitive for hard pressed Americans to use the policies because of the deductibles and co-pays. For the very poor, who are thrown into Medicaid systems, any assets they might have, such as a home, are subject to confiscation to cover their Medicaid bills. The only people other than the insurance companies who benefit from Obamacare are the down and out who are devoid of all assets. 
 
The whole point here, that everyone wants to miss because they are to busy playing party cheerleader, isn't whether the government can afford this program or not, it's that the American citizenry is getting fuged by capitalistic greed. The government can afford the costs of the program and all these bullshit scripted budget hostage crap is nothing but political posturing over votes and other extraneous nonsense. No one in government cares about what this plan is really about - squeezing every last bit of money from a populace who's median income hasn't risen in 25 fuging years. The entire argument is "Ohhh nooooo, we can't increase the deficit!!!!" rather than "Ohh no, this is bad for the average citizen!!!" or "This is nothing but a corporate Healthcare and Insurance sellout!!!!"

 

I agree but for now at least the ACA is expanding access. But if things keep going where they are going I don't see the middle class(or the former middle class) taking much more of it. The rich get richer and poor get poorer. Minimum wage has become garbage. We just physically can't keep at it forever. If you have ever read the Communist Manifesto it eerily and hauntingly foreshadows this. Not saying that we will overthrow the bourgeoisie and become pure communist but there will be a breaking point. We should be more of a social capitol gov't then what we are now with what is overrun with greed. We should have free health care. We have the right to life and to pursue happiness means to have a healthy life. Health is more than a product. It is something more innately moral than auto insurance or the alike. Some will gladly preach that the life of a fetus is special and human, yet the uninsured are SOL.

 

 

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I don't have the exact numbers right in front of me but I'll break it down as best I can generally. 

 

Business makes 5 million a year gross. After taxes and expenses, there is 1 million profit. From this 1 million profit, 70% is reinvested into the business, and the remaining 300k is the owners "salary." 

 

In order to remain competitive, business needs to hire 1 more employee bringing the total to 50. ACA now kicks in. For each employee an employer contribution of $500 is required per employee (again, I'm putting a number out there for example). The employers overhead has now climbed $25k per month. Is that employee bringing in an extra $25k in pure profit per month? Probably not.

 

We will keep the number at 5 million gross because this move was made to remain competitive. Instead of 1 mil profit, there is 700k. The reinvestment  into the company is now 490k, 210k less than before and the owners salary has dropped 90k a year. Again, no new significant income, but 300k has now been pulled out. 

 

So what this example breaks down to is, to go from 49 to 50 employees is going to cost 300k. At that point, my earlier post comes into play. And when you're in a business where you can lose a contract because of being $500 more than someone else, that cost is much larger than it looks. Crossing that threshold is huge.

 

 

Ok that's informative.  First though, I wouldn't call that a small business, honestly.  97% of all businesses in the country have less than 50 employees.    If it pans out like that, I guess it's a decision of maybe reinvesting a bit less for more of a salary.  Could it be possible that it's cheaper to offer some kind of insurance plans though?  I'm not sure how much that would cost but some are less than others and as long as they meet the requirements you'd be ok.  Plus it could give you a competitive advantage versus those companies with less workers that aren't offering plans.  

 

Or maybe talk with your employees about how they feel, maybe pay cuts to get a plan in there, etc.  Most companies wouldn't do that but sometimes if you just throw the truth out there, and say you'd like to reinvest in the company (which is better for everyone) and this is where it all stands, people are usually more receptive with the truth.

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If I go to work for a company the first thing I want to know about is what kind of benefits they offer. Having a decent health insurance plan is probably more important to people looking for stable long term jobs that just gross pay by itself. When I was a contractor I made a lot more cash so I bought a good plan. When I was hired on I made less money but got a less expensive, better, insurance package for my family. It's all in how you market it.

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There are definitely other options out there. The original question was about the ACA so that's what I used. I still consider 50 a small business relatively speaking. I like to think that some day I will be able to franchise and be in multiple cities. I would hope that I will be able to provide insurance for my employees. Right now, that's not possible, I'm still too small. I will get to that point and when I do, I will make sure my people are taken care of. Thanks for your insight though, it gives me another perspective to look at. 

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Ok that's informative.  First though, I wouldn't call that a small business, honestly.  97% of all businesses in the country have less than 50 employees.    If it pans out like that, I guess it's a decision of maybe reinvesting a bit less for more of a salary.  Could it be possible that it's cheaper to offer some kind of insurance plans though?  I'm not sure how much that would cost but some are less than others and as long as they meet the requirements you'd be ok.  Plus it could give you a competitive advantage versus those companies with less workers that aren't offering plans.  

 

Or maybe talk with your employees about how they feel, maybe pay cuts to get a plan in there, etc.  Most companies wouldn't do that but sometimes if you just throw the truth out there, and say you'd like to reinvest in the company (which is better for everyone) and this is where it all stands, people are usually more receptive with the truth.

 

Just FYI, the Small Business Administration defines "small business" as:

 

SBA defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:

  •     Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;
  •    Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;
  •     Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;
  •     Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided;
  •     General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction;
  •     Special Trade Construction: Annual receipts may not exceed $7 million; and
  •     Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.

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Just FYI, the Small Business Administration defines "small business" as:

 

SBA defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:

  •     Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;
  •    Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;
  •     Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;
  •     Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided;
  •     General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction;
  •     Special Trade Construction: Annual receipts may not exceed $7 million; and
  •     Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.

 

that is why there is a serious disconnect between what the public feels about corporations and what the corporations feel about themselves.

 

Most everyday people would not consider 500 employees a small-time operation regardless of what they are doing. Because of this, they have no sympathy for the business owners of companies like that and will never side with them in political debate.

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http://www.paulcraigroberts.org/2013/02/03/obamacare-a-primer/

 

Read.

 

When Republicans for ideological reasons blocked a single-payer health system like the rest of the developed world has and, indeed, even some developing countries have, the Obama regime, needing a victory, went to the insurance companies and told them to come up with a health care plan that the insurance lobby could get passed by Congress. Obamacare was written by the private insurance industry with the goal of raising its profits with 50 million mandated new customers. 
 
Obamacare works for the insurance companies, but not for the uninsured. The cost of using Obamacare is prohibitive for those who most need the health coverage. The cost of the premiums net of the government subsidy is large. It amounts to a substantial pay cut for people struggling to pay their bills. In addition to the premium cost, it is prohibitive for hard pressed Americans to use the policies because of the deductibles and co-pays. For the very poor, who are thrown into Medicaid systems, any assets they might have, such as a home, are subject to confiscation to cover their Medicaid bills. The only people other than the insurance companies who benefit from Obamacare are the down and out who are devoid of all assets. 
 
The whole point here, that everyone wants to miss because they are to busy playing party cheerleader, isn't whether the government can afford this program or not, it's that the American citizenry is getting fuged by capitalistic greed. The government can afford the costs of the program and all these bullshit scripted budget hostage crap is nothing but political posturing over votes and other extraneous nonsense. No one in government cares about what this plan is really about - squeezing every last bit of money from a populace who's median income hasn't risen in 25 fuging years. The entire argument is "Ohhh nooooo, we can't increase the deficit!!!!" rather than "Ohh no, this is bad for the average citizen!!!" or "This is nothing but a corporate Healthcare and Insurance sellout!!!!"

 

 

All the people I am talking to in the industry are not looking for profits to go up but rather are worried that the restrictions on loss ratios and rate increases will hurt them significantly. This is why all the big players (Aetna, Humana and many others) are opting out of the exchanges.

 

The restrictions on how the companies can rate risks is very handcuffing.

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