Small business and Obamacare: the new law's rules do apply "to the vast majority of all businesses".

Author:Lahm, Robert J., Jr.


The idea behind the Affordable Care Act (ACA) also known as Obamacare or by its full name, The Patient Protection and Affordable Care Act (P.L. 111-148) ("Patient Protection and Affordable Care Act," 2010), was to provide health care coverage for all Americans, and to do so affordably. The Health Care And Education Reconciliation Act of 2010 (Public Law 111--152) ("Health Care And Education Reconciliation Act," 2010) added to the already lengthy and legislation. Infamously, Nancy Pelosi, Speaker of House, has been widely quoted after stating: "But we have to pass the bill so that you can find out, what is in it--away from the fog of the controversy" (Pelosi, 2010). However, notwithstanding the ACA's passage, it has remained embroiled in controversy ever since.

A major challenge began when the National Federation of Independent Businesses (NFIB), and twenty-six states, along with private individuals challenged the constitutionality of the law in an action against the U.S. Departments of Health and Human Services (HHS), Treasury, and Labor, and their respective Secretaries before the Supreme Court. The law was upheld, by a 5 to 4 vote, but only after the Court determined that the Individual Shared Responsibility Payment (which had been labeled in the original language of law as a "penalty") could effectively be considered a tax, further reasoning: "The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation" ("National Federation of Independent Business v. Sebelius, Slip Opinion, No. 11-393," 2012, p. 4).

Surveys from reputable research organizations show that small businesses are reacting to the ACA by reducing hours and putting off hiring decisions. As well, large employers such as Home Depot and Trader Joe's are cutting health benefits for part-timers while others such as are IBM are removing retirees (Whelan, 2013) while United Parcel Service (UPS) announced that it was removing approximately 15,000 spouses employees' from its company health plan (Wieczner, 2013). "By denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act" (Ibid). Besides legal challenges, implementation of Obamacare has been accompanied by a government shutdown (Rinaldi, 2013), numerous other delays, exemptions (Pfeiffer, 2013), waivers (Radnofsky, Weaver, & Needleman, 2013), and millions of existing policy cancellation notices (Barrineau & Dastagir, 2013; Roy, 2013a).

Recently, due to problems with the website, it was announced that the Small Business Health Option Program (SHOP) marketplace exchanges on the site would be delayed for another year until November 2014 (Taulli, 2013), thereby exacerbating an environment of economic uncertainty (Banjo, 2013; Rogers, 2012; Straud, 2013). While these website problems were at first passed off as glitches, through a series of hearings, investigations, and media reports, it became obvious that a plethora of problems existed, including security vulnerabilities that put users' personal privacy at risk. Despite the fact that the website has not been fully functioning, and following a two month delay for repairs (the administration backpedaled to suggest that fully functioning meant that it would work for a majority of users), individuals are still threatened by IRS imposed penalties if they fail to sign-up. The law's complexity is such that consumers and small businesses will be subjected to a difficult, underestimated, and costly compliance burden (Lahm, 2013) as they struggle to navigate numerous difficult-to-interpret provisions (Amato & Schreiber, 2013; Coombs, 2013; Neiburger, 2011), requiring significant amounts of assistance from tax and accounting professionals (Amato & Schreiber, 2013).

With the above as a backdrop, scholars in the business disciplines have not yet made significant contributions to the literature with respect to the impacts of Obamacare on entrepreneurs and small businesses. Given the importance of small businesses and their contributions to the U.S. economy, and hence the world economy (Boot, 2010; Faal, 2013), substantial and ongoing research efforts are warranted. As such, this present paper constitutes one such effort to explore ramifications of the law and to present conceptual frameworks.


A literature review was conducted at the onset of this research using the following Ebsco databases simultaneously: Academic Search Complete, Business Source Complete, Entrepreneurial Studies Source, and Small Business Reference Center. Using the search terms "small business" and "Obamacare" combined, 120 items were returned as initial search results. However, upon applying filters to select for scholarly-peer reviewed articles, results were narrowed significantly to two articles. One of these was an article published in the Journal of Law, Medicine & Ethics, and the other was published in Business Horizons (business law and ethics section). A subsequent search using the proper name, "Affordable Care Act," and "small business" in combination returned more robust results with the filter applied for scholarly-peer reviewed articles, identifying 62 articles.

Many of these, judging by the journal titles in which they appeared and through sampling content, were focused on scholars or professionals in health care, law, and accountancy. Examples included: Health Affairs (several), New England Journal of Medicine, Benefits Quarterly, Journal of Health Politics, Policy & Law, and Health Services Research. Some publications, notwithstanding the application of the search results filter for scholarly-peer reviewed articles, were targeted to professionals in law and accounting, such as CPA Journal. While such scholarship as suggested above is appreciated and served to inform that discourse has begun among some researchers, given the importance of Obamacare and its potential impact on small businesses and the economy, the need for a far more robust flow of research would seem to be obvious. For purposes of comparison, the list maintained by Katz (2012) "Core publications in entrepreneurship and related fields: A guide to getting published," was used to arrive at the conclusion that thus far lacking in the literature are contributions that are specific to the discipline(s) of small business and entrepreneurship.

Notwithstanding the above described lack of scholarly literature, an almost extraordinary amount of coverage exists flowing from the news media, blogs and other websites, and business publications such as Entrepreneur, Business Week, Wall Street Journal, and Forbes. As a result of these initial search efforts it became clear that an exploratory approach under a qualitative research frame was justified. Cultural artifact(s) may be incorporated as data sources in qualitative designs (Fiske, 1994; Hodder, 1994). Data sources may include audio, video, artwork, or still photography; direct observations or interviews; and documents of various types such as field notes, diaries and personal letters, biographies, or those from public sources, (Creswell, 1994, pp. 148-149).

Accordingly, the search engines Google and Google Scholar were employed to identify and collect additional artifacts for review. Since Obamacare and its impact has been the subject of enormous controversy and discourse in the public sphere, plentiful artifacts were identified for review and further analysis. In many instances popular media might refer to government documents, polls, studies, or other seminal sources, and where possible (media are notorious for referring to but not fully citing original sources) these seminal sources were sought so as to be utilized directly. A database of over 170 artifacts was collected, keeping in mind that some items are voluminous, individually. For example, The Patient Protection and Affordable Care Act (Public Law 111-148) is a 906 page pdf document (as cited in the reference list). The Health Care And Education Reconciliation Act of 2010 (Public Law 111--152) added another 55 pages to amend the original legislation, and a document from the U.S. House of Representatives, Office of the Legislative Counsel, which compiled these two legislative acts, is 974 pages long ("Office of the Legislative Counsel Compilation of Patient Protection And Affordable Care Act," 2010).


The 2007 recession hit businesses hard (Kobe, 2012), and even though recent years have shown some improvement, the U.S. economy has yet to fully recover. The U.S. Small business Administration's (SBA) Office of Advocacy publication entitled, The Small Business Economy 2012, is part of an ongoing series of reports (released over the past three decades) which document trends on financing, ownership, employment and other characteristics. In a cover letter introducing this latest report, it was observed that "the effects of the most recent downturn are still being felt. The number of business births and their associated employment remain below pre-downturn levels and employment gains have been muted compared with previous downturns" ("The small business economy," 2012). Small business share of Gross Domestic Product (GDP) was above 48 percent in 2002 but plunged to about 44.5 percent in 2010. (Kobe, 2012). Although challenged by the continuing repercussions of the downturn, small firms were nevertheless responsible for creating almost two thirds of net new jobs between 1993 and 2010. In numbers, 11.8 million of the 18.5 million net new jobs created during this period were generated by small firms ("Frequently Asked Questions about small business," 2012).

Findings from a survey released by the...

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