The ACA and Entrepreneurship in the 2016 Election (Blog Post)

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Author	Dylan Dickens
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© edegan.com, 2016

The Affordable Care Act has become a major part of American life with an estimated 17 million Americans currently gaining coverage from it and has become “the most decisive question in the 2016 presidential election(1).” One of the major concerns surrounding the ACA is its supposed negative effect on business, especially small business.

Healthcare regulation has been accused of "killing" small business. A 2012 Gallup poll of small business owners found that 48% of small business owners point to potential healthcare costs and 46% point to government regulations as reasons why they are NOT hiring new employees(2). In spite of this survey, the 2009-2015 head of the Congressional Budget Office, Douglas Elmendorf, and John Arensmeyer, founder and CEO of the Small Business Majority, have both released statements questioning any long-term negative effects of the Affordable Care Act and have even suggested that there will be benefits

The ACA does not apply to businesses with fewer than 50 employees. According to Census Bureau data, there are currently 5.73 million small businesses which employ individuals in the U.S. Of these firms, 96% are businesses with less than 50 employees. For all of the debate and fear surrounding Obamacare’s effect on small business, 5.50 million of the 5.73 million small firms in the United States are not affected at all, and are more than 30 employers away from ever being affected.

To further put the ACA’s effects into perspective, only 0.2% of U.S. small businesses do not already provide insurance to their employees. This compounded with the small percentage of small businesses large enough to require coverage, and you have dubious overall effects. Furthermore, there are potential financial benefits to ACA coverage. 5.13 million of U.S. small businesses, 89.6%, have fewer than 20 employees, and thus, qualify for a tax break to completely offset the costs of the ACA should they chose to use it to supply coverage for their employees(3).

This allows nearly 90% of U.S. small businesses to gain effectively free coverage for their employees if they chose, a powerful incentive for hiring more skilled labor, and an arguable boon for small businesses. The ACA also provide a financially sound option for 83% of the currently uncovered employees of small businesses in the United States, effectively closing the, albeit small, coverage gap that existed before the ACA was implemented.

After identifying that the ACA seems to be a tentatively good policy for small business in the long run, how do the two candidates stand on the issue? Hillary Clinton, whose website claims she will "be the small business president," takes a strong stance on healthcare, vowing to defend the Affordable Care Act and strengthen its benefits while minimizing its detriments in regards to small business. Donald Trump on the other hand wholly opposes the Affordable Care Act, stating that he will request a congressional repeal of the act on his first day in office. It is important to keep in mind how the ACA affects may manifest differently in the future, and to have a candidate ready to pounce on the potential benefits and protect against the potential detriments, rather than have a broad sweeping and preemptive policy.

Google Doc Link: https://docs.google.com/a/rice.edu/document/d/11Kwnf8CK1QHtDr1IhKoL3ZG4mydzIu_qkq-ZFFdG3YQ/edit?usp=sharing

(1)http://www.theatlantic.com/politics/archive/2015/04/the-question-that-will-decide-the-2016-election/391137/ (2)http://www.gallup.com/poll/152654/health-costs-gov-regulations-curb-small-business-hiring.aspx (3)http://www.forbes.com/sites/theyec/2013/04/22/is-the-affordable-care-act-really-bad-for-business/#f12c865457a5