Entrepreneurs say Obamacare would force closings, create ‘unimaginable’ financial burdens

Kyle Gillis

LAS VEGAS — If the Patient Protection and Affordable Care Act — commonly called “Obamacare” — is upheld by the United States Supreme Court, small businesses will not just pay tens of thousands of dollars more a year complying with regulations. They could also be forced to close, say two Nevada business owners.

“A lot of businesses are bracing for this bill,” said Jeff Ecker, general manager of Paymon’s Mediterranean Cafe in Las Vegas. “Instead of spending money in the community, businesses are waiting to see if all the regulations from [Obamacare] are going to take effect.”

Paymon’s has two locations in Las Vegas, and both have faced their share of struggles during the recession. If Obamacare is upheld, says Ecker, businesses with multiple locations could be forced to close one or more locations. That’s because Obamacare penalizes businesses that don’t provide government-approved health insurance for their employees.

“Based on the Obamacare mandate, we would be able to deduct the first 30 full-time employees from the $2,000 per-employee, per-year penalties,” Ecker said.

“This leaves us with roughly 35-40 full-time employees that we would have to pay the penalty for, as we certainly would not be able to afford any quality health care insurance for our staff in this economic climate.”

Ecker is referring to Section 1513 of Obamacare, commonly referred to as the “Employer Mandate,” which says any business employing more than 50 workers that does not provide a government-approved “qualifying health insurance” plan will be fined $2,000 per uncovered worker.

The first 30 full-time employees can be deducted, as Ecker explained, but his business would have to pay a fine for the 35 to 40 full-time employees without insurance. At $2,000 per employee, Ecker’s company could be paying an additional $80,000 a year in penalties.

“We would have to conclude that rather than taking a $70,000 to $80,000 penalty, which would ultimately lead to the closing of both locations, we merely close down one location and continue to operate,” Ecker said.

“That leaves 35 to 40 people unemployed and a landlord with a vacancy. The math is simple and the chain reaction of fiscal pain among businesses, employees and creditors is substantial.”

Ecker isn’t the only businessman concerned about Obamacare’s effect on the private sector. Scott Graham, the president of MBI X-Ray and Medical Supply in Las Vegas, said he has already had to cut three employees in order to comply with the Employer Mandate’s impending standards.

“This [Obamacare] isn’t written to help small businesses,” said Graham. “We provide an insurance plan, but the government isn’t helping anyone if it picks and chooses which plans are acceptable and which aren’t.”

Graham has been in business for 28 years and estimated he pays between $80,000 and $100,000 per year in various government fees and regulations. He says if Obamacare is upheld and every aspect is implemented, the amount of fees his business will be paying is “unimaginable.”

“A big part of my business is storing and depositing potentially harmful X-ray films, so I can respect fair and sensible regulations,” Graham said, “but Obamacare does not contain any fair or sensible regulations.”

In Northern Nevada, Tim Wulf, the owner of two Jimmy John’s sandwich shops in Reno, told the Las Vegas Sun he sold his third franchise and cut employment in preparation for Obamacare.

“Obamacare was the straw that broke the camel’s back,” Wulf told the Sun.

The Nevada Policy Research Institute, the nonprofit think tank that publishes Nevada Journal, has noted that Obamacare creates over $400 million in new taxes and fees over the next seven years, many of which will be passed on to small businesses.

Geoffrey Lawrence, NPRI’s fiscal analyst and deputy policy director, has written that Obamacare burdens states by pushing more individuals onto already heavy-laden state Medicaid rolls. This drives governors across the country, such as Nevada Gov. Brian Sandoval, toward tax increases. Writes Lawrence:

One of the central ploys by which Obamacare seeks to expand medical coverage is by forcing states to loosen Medicaid eligibility requirements.

This requirement, in tandem with the individual mandate provision that will punish individuals who do not purchase a government-approved insurance policy, will push 16 million new individuals onto state Medicaid rolls nationwide.

As of today, the Supreme Court had not issued a ruling on Obamacare’s constitutionality, although a decision is expected soon, and Ecker remains hopeful the law is overturned.

“If it [Obamacare] stands and businesses end up closing, I’m not sure there’s enough momentum for them [business owners] to get back in,” Ecker said.

 Kyle Gillis is a reporter for Nevada Journal, a publication of the Nevada Policy Research Institute. For more in-depth reporting, visit http://nevadajournal.com/ and http://npri.org/.

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