Side Effects of Health Care Reform

By: Dr. Lynn Reaser

Now that the Supreme Court has ruled on the constitutionality of the requirement that all Americans obtain health care insurance, questions are emerging regarding the implications for business.

Under the law, firms with 50 or more full-time employees are required to either provide health care insurance for their workers or pay a penalty.  The question many are asking is whether firms will opt to pay tax penalties rather than continue offering health care coverage for their employees.

Most companies currently offering health care coverage will probably continue to do so as health care benefits have become a part of the standard compensation package firms use to compete for good employees.  However, companies may well boost the share of medical expenses borne by employees and give incentives for healthier life styles.

Many firms not currently offering health care may opt to pay the penalties and encourage their workers to use the health care exchanges that will be set up to sell insurance.  Companies with fewer than 50 full-time employees will be reluctant to expand in order to avoid the mandatory costs of either health care coverage or penalties.  As a result, health care reform could either result in a proliferation of entities below the 50-person threshold or generally stifle job growth going forward.



One response to “Side Effects of Health Care Reform

  1. I have noticed a lot of employers opting for the “independent contractor” status for “employees” rather then having to pay unemployment insurance and other costs of having employees. Perhaps this trend become more prevalent as employers attempt to avoid health care expenses. Obama must have never heard of the law of unintended consequences.

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