Obamacare and Insanity - Cancer to Small Business

Let me begin today's post by challenging the seemingly inexorable norm that bonds health care to employers. Of all goods and services, health care and accompanying medical insurance are very important to the well-being of an individual or family. After all, we desire medical care for ourselves and dependents, and we also wish to contain its cost. For similar reasons we insure our homes from fire and insure our automobiles to protect us from the financial impact of accidents - all to contain cost. And just as we wish to keep our bodies working and need access to preventative health care, we also need to fix our cars and houses, and often purchase automobile warranties and even warranties for our home and important appliances.

I have to assume that at some point in history, medical insurance was first offered by an employer to its employees - as a benefit to make working there attractive. Imagine what a novelty this was at the time! This practice soon caught on as the demand for labor competed for its supply. And nowadays, this benefit from an employer has come to be viewed as an obligation from them, and is about to be codified into law as an obligation during one of the worst recessions in history.

So ask yourself, why should your employer provide you access to medical insurance and coverage? Don't get me wrong, this is a good thing if your employer offers this, but why should they be required to do so by law? And if so, why should they pay for any of it? Should your employer provide you an extended warranty on your car? Should property and casualty insurance be arranged through and paid for by your employer? That sounds ridiculous, of course. But I have to imagine that if employers started offering it as a benefit, one day this novel benefit would become law. From another perspective, why isn't medical coverage offered through your cable TV provider? After all, probably more people actually have cable TV in this country than actually have jobs. Your utility provider? Churches? My point is that what seems so customary is actually also quite arbitrary.

One part of the current proposal calls for business with payrolls in excess of $250,000 either provide coverage or pay employees 8% of their wages. Now that is a hefty tax! And this comes at a time when federal minimum wages are up 40% in just two years! How would a small business handle that? If they are on the margins they will likely resort to a policy of avoidance - either laying off employees to get just underneath the threshold, using temp workers instead, or even more complicated things like splitting their business into smaller segments - for instance, a small grocery store splits into a "produce business" and a "dry goods business," assigning $249,000 worth of employees to one and $249,000 to the other. People WILL get creative.

There is also to be tax surcharges on top-line income of Americans to pay for the "government-funded" option. Many small business owners aren't incorporated, so their business' financial operations just pass-through to their personal tax returns. Thus the tax surcharge will be essentially applied to their revenue, not their income, after which business expense deductions would have been applied.

At best, the United States is acting like a sub-prime borrower. According to the Congressional Budget Office, the Obama administration's proposed budget will mean our federal debt will rise from 41% to 82% of GDP by 2019! THAT IS INSANE! Who will ever repay this debt? How much can the "wealthy" afford? This year alone, theTax Policy Center estimates that an astounding 47% of tax-filing households will have NO federal tax liability. The continued shifting of the tax burden to a certain segment of society destroys the very incentives of these citizens who actually create the jobs America so desperately needs, or who purchase goods and services from others who create the jobs we need.

STOP THE INSANITY!