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King v Burwell Decision Preserves Costly Burden on Small Businesses

King v Burwell Decision Preserves Costly Burden on Small Businesses


From mid-size firms to mom-and-pop shops of just a handful of employees, small-businesses are the backbone of the U.S. economy.  A recent study by The Libre Institute underscores just how important the ability to start a business is to the Hispanic community, as it provides financial independence and a pathway to the American Dream. To allow small businesses and entrepreneurs to flourish is to allow citizens to take control of their lives and economic future; to get in their way is to handicap progress. With the recent decision in the King v. Burwell Supreme Court case, the question of how the health care law affects small businesses facing an onerous employer mandate is once again front and center. When the Court ruled on insurance subsidies, it simultaneously rules on the employer mandate – with major ramifications for the nation’s entrepreneurs.


Just how many businesses are affected by the mandate at this time? If you’re in Texas, there are over 30,000 businesses with 50 or more employees. In Arizona, there are over 7,000.  In Florida, there are over 20,000 (a helpful map from the American Action Forum (AAF) shows the number for each state).  Low-to-middle income employees at these firms are likely to have mixed feelings about how the Supreme Court ruling.  In preserving subsidies for millions, the Court effectively denied valuable relief to those in the small-business community. As AAF has explained:


…medium and large employers in the 37 states with federal exchanges would no longer be burdened with the ACA’s employer mandate. The employer mandate requires all employers with 100 or more “full-time” workers (50 or more effective 2016) to provide their employees with health insurance. AAF previously assessed the labor market effects of the mandate and other regulations, finding that they have already reduced employment and weekly pay. To make matters worse, the ACA defines “full-time” as working 30 or more hours per week, which is nowhere close to reality in today’s labor market. As a result, all employers with 100 or more workers this year and 50 or more next year must be conscious of all their workers’ hours if they wish to avoid the employer mandate.


The unfortunate reality is that when the federal government tries to do something big – and all at once – there will be unintended and destructive consequences just as big, and just as sudden.  When it comes to would-be, future entrepreneurs, there is no way to tell how many have looked at the difficulties and burdens facing them – thanks to regulations and laws like the Affordable Care Act – and decided not to pursue that dream of opening up their own shop.  While the Court delivered good news to subsidy recipients, it chose at the same time to maintain one of the onerous and costly provisions of the law – one that will have a negative effect on job creation going forward.