Obamacare Effect on Small Business and Lending
Regulations, such as Obamacare, are now impacting small business. How will this effect lending, alternative financing and banks?
Lauren Simonetti: Do you remember that bombshell dropped back on Tuesday, saying that Obamacare, the Affordable Care Act, is really gonna hurt workers in this country, reducing the full-time workers by more than 2 million workers and also be a disincentive for many companies to hire workers and give workers more hours. We’re talking about all of this with Katie Vlietstra; did I say that right, Katie?
Katie Vlietstra: Good morning, Lauren. Yes, you did.
Lauren Simonetti: I did! Okay, great! I was nervous about that one. You’re with the National Association of Self-Employed Workers; and David Sussman, joining us once again with Valcor Worldwide, a small businesses advocacy company. Nice to see both of you, Katie and David.
David Sussman: Hi Lauren, thanks for having us.
Lauren Simonetti: Alright, before we jump into this, I want to roll a soundbite of Jason Furman, the Chairman of the Council of Economic Advisers, responding to this, in the White House press briefing, after the CBO report came out, back on Tuesday. He’s trying to put a positive spin. Let’s take a listen.
Jason Furman: It doesn’t say, “losing jobs”, it says FTEs, so to some degree this maybe somebody who used to work 60-hours, because they needed health insurance and that was the only job that offered it. And now they can get a different job at 35-hours that doesn’t offer health insurance, but they’re getting it through this. They’re switching from one to the other, and that’s a better choice for that person. This is giving them an option that they didn’t used to have.
Lauren Simonetti: Okay, ladies first – Katie, we’ll start with you. Do you agree with that positive spin?
Katie Vlietstra: No, Lauren, in fact, continue to be a little frustrated with how the White House keeps on trying to have it both ways. You know they talked about, just two weeks ago, in the State of the Union about the importance of growing the middle class, providing upward economic mobility to those who are looking to have a better life here in the United States. And here they have someone talking about working a 60-hour a week job, and actually the Affordable Care Act says a full-time job is at 30 hours a week. And I think you know that the House Ways and Means Committee just tried to push that up to a realistic 40-hours a week is considered a full-time employee. So I just continue to see this back and forth; I think they’re dealing with some very harsh, unintended consequences of this law, and their scrambling, a little bit, to try and justify, you know, this complete healthcare overhaul that is now impacting, every single American in the United States.
Lauren Simonetti: Right, and David, you say that the Affordable Care Act dis-incentivizes both lower income and higher income workers.
David Sussman: Both, yes absolutely, and what we’re looking at here, if you go back to what Chief Elmendorf talked about yesterday, he quote, unquote, said that “This is going to be the central factor, Obamacare, the central factor in slowing economic growth.” When you have low income workers, who are better off not taking work, and leaving their job because they now can get free healthcare, obviously that adds to the, uh, entitlement, that’s correct, which we all pay for. Even on upper-income workers, when you have the White House and members of Congress saying that this is a positive thing, because people can now go and achieve their passion. They can go and do some hobbies, become writers. I believe Nancy Pelosi said yesterday that it’s completely out of the realm of reality. These people are making decisions, from the perspective that they’ve never run a small business before, and I believe that’s going to have a major impact on the economy as a whole, negatively.
Lauren Simonetti: Handout society… Negatively, Katie, would you agree?
Katie Vlietstra: Yes, and one of the things that I was really struggling with yesterday is reviewing the CBO report and the back and forth, you know, how republicans and democrats treated this, I was thinking about the entrepreneur, the self-employed member that is out there. They are working their tails off. They’re taking every new client they can get. They are building their business from the ground up. And if the mentality from the top, from the President himself, is saying work less; we’re going to provide healthcare for you, we have a really mixed message. I don’t know any (inaudible) member that is going to see no to another book of business, that’s going to say no to another project. And even if it pushes them outside of the premium assistance, they’re going to know every day that they wake up that they’re meeting that kind of “American spirit”, that American dream of running their own business. So I think the message that we are sending is frankly, very disheartening to those entrepreneurs that are out there, that aren’t working 60-hours a week, they’re working 80, 100 hours a week, because it’s so important to them to have something that’s their own.
Lauren Simonetti: Right, well mixed messages for sure and also David, we could see an increase in employee turnover because of this. Many employees may kind of say, “You know, I kind of needed this job, because I needed healthcare for myself, for my family, but they may not be saying that anymore.
David Sussman: When you reduce the incentive of employees to stay at a company for many years, you lose the potential of grooming that employee to become, from a low rung employee to middle manager, to eventually upper management and so what you’re doing is you’re taking the talent pool and basically saying, “Hey, you don’t need healthcare from us, so every six months, every year, I’m gonna have to hire new people.” It’s going to be more expensive and it’s going to be more costly to run my business, which means I’m going to have less profit to hire people. It’s unfortunately a snowball effect.
Lauren Simonetti: And David, for small businesses, they just don’t want the run around. You want some sort of certainty to always use that clichéd word but it seems like… This is the alarm in our building, I’m sorry. Our power system is having some trouble right now. I got stuck in the stairwell because I couldn’t use the elevator, coming to the show. So you might hear it, our viewers might hear it as well. But that’s what’s going on. But as I was saying, it seems like small business owners just really want certainty but it seems, they are getting anything but, David.
David Sussman: Yeah, this is an ongoing theme. The lack of certainty in the marketplace with Obamacare, we’re got the employer mandate that’s been delayed now until October of this year, which means, starting at about June or July, this summer, employers are going to start seeing what their premiums are going to look like for 2015 and this is where, we are going to have some major numbers and you’re going to start to see this reported, later on in the summer, just in time for the election, by the way, interesting, that are gonna show that the number of employers actually reducing coverage for employees. And we are going to see many, many, many more employees coming on to the exchanges and start to depend upon the Medicaid programs that are out there and in many cases, are going to add to those (rolls?) that taxpayers are paying for.
Lauren Simonetti: But the reality is now, Katie, that the Affordable Care Act is the law of the land. And you say, in the notes that I have from you, if I have this correct, is that we should change the conversation. We are not going to repeal it; we should stop doing that and figure out a way to tweak it?
Katie Vlietstra: Absolutely, and you know everyone has been talking about, for the last couple of years, the repeal, repeal mantra. I do think that there is a, kind of a two-way, dual track here. There is the repeal-replace options and the House Republicans and the Senate Republicans are gonna have to come up with a pretty comprehensive plan, if they want to fully overhaul the Affordable Care Act. And I think there is another avenue of how can we make this law better; how can we make it work for us. I think to David’s point, we need to have a conversation about the employer mandate, in the full-time employee equivalent hours. Talking about other things as it relates to how are ensuring that people are getting both affordable health coverage and comprehensive. You know one of the latest things that our members are dealing with and it’s kind of been kind of an under-story, is these shrinking of networks. So previously, they had a much bigger network that they could see many doctors. Now, they’re going in and they’re realizing that that bronze, silver or gold plan that they purchased in the exchange, doesn’t cover all of the doctors that they need. And so where can we do more market reform in that area to ensure that when you’re buying a healthcare product, you’re fully aware of what you’re purchasing and that you’re getting the coverage you need. And really quick Lauren, I want to push back a little bit on what David said about the turnover employees. There is one very small silver lining in this, is that correct, if people know that they can go buy affordable healthcare, in a more marketplace, and hopefully in a more, market-driven place, we are going to maybe, we are going to see more smaller businesses start. Whereas before, we have talked to NASC members, have been afraid to leave their great corporate job, and start their own business, because of healthcare. And so one small silver lining is that we are going to see those people jumping to that entrepreneurial field, start a business, and know that they have a realistic healthcare option to pay for them and their families.
Lauren Simonetti: We have a viewer chiming in now, Flyinghighokc says, “Ten percent of the healthcare industry is not being paid because of Medicaid denials.” So this is an economical problem; do any of you want to respond to that? Medicaid denials? Go ahead.
Katie Vlietstra: I still think that in where we are seeing this massive explosion of Medicaid, more States reforming their systems, we are going to have to deal with further reforms in this area. I think this is the challenge. I think all of us, as we are talking about healthcare, you know positive or negative, pushing forward and saying, where can we have the more market-driven society; where can Medicaid really provide a valuable service to individuals across the United States, but also in ensuring that people are getting paid. I know that there is a huge concern when it comes to subsidized care for those who are in private facilities if you’re having nursing care, that sort of thing. So we have to work on it and that’s how I feel when we’re talking about – how do we make this law better – this is a prime example of where we can work hard together to make it better.
Lauren Simonetti: And David, I’ll let you wrap this up with your final thoughts.
David Sussman: Well, real quickly, I want to say further to what Katie was just saying – I’m the biggest advocate for entrepreneurs out there. I am the son of an entrepreneur; I train entrepreneurs, I teach entrepreneurs. I’m an entrepreneur myself. And with the ability to increase the number of entrepreneurs in this country, I would cheerlead that. But what are we talking about here, realistically speaking, we’re talking about lower income people that are being dis-incentivized to work, to say to them, “You know you’ve been working 35-hours a week, just to keep your health insurance; now you can go and pursue your passion; now you can go and pursue your dreams.” Many of these are those who don’t have the wherewithal to start up a new business. It’s extremely tough to start up a new business today…and very expensive, if you can get the money to start with as well. So we’re talking about people who are going to end up sponging off the system, off those taxpayers that are working every single day. And I think that definitely that is a conversation that needs to be had.
Lauren Simonetti: And expensive… Yeah, I think that that is the biggest problem that we might end up seeing as a result of this. Thank you so much for forwarding this discussion – Katie Vlietstra with the National Association of Self-Employed and David Sussman with Valcor Worldwide. Thank you so much to both of you. Have a great day.
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