Taken from: The Wall Street Journal Entrepreneurship Weekly Review

Small Firms See Pain in Health Law
by: Louise Radnofsky
Aug 01, 2012
Click here to view the full article on WSJ.com

TOPICS: Government Regulation, Healthcare, Small Business

SUMMARY: Small firms are nervous about the impact of the new health law. The law requires that employers with 50 of more full-time workers provide health insurance to employees by 2014 or pay a penalty. This provision may cause some firms that planned to expand, cut back on their plans to say under the 50 employee threshold. Restaurants and retailers, in particular, may feel the pinch. These industries historically have been the least likely to provide insurance to workers, and may now need to start providing health insurance. McDonald’s, for example, has estimated that the law will add between $10,000 and $30,000 in added annual costs to each of its 14,000 restaurants in the U.S., 89% of which are franchisee-owned. One owner of a Quiznos franchise, quoted in the article, said “I don’t have the profit margin to pay for it.” Some owners who offer limited health-benefit plans have actually said that they might drop their plans and pay penalties rather than provide the more expensive insurance. Democrats who crafted the health-overall law say that employee coverage is essential to making the law work. One benefit of the new law is that it will create insurance exchanges that will allow employers to shop for the most economical health care plans possible.

This article illustrates the impact that government regulations have on small business. Talk to your students about the new health care legislation, and the impact that it will have on small business. Think of a small business that may soon cross the threshold of 50 employees, and the options that the business has in regard to the health care law. Also, talk about the role of government in regulating small business in general.

Reviewed By: Bruce Barringer, Oklahoma State University

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