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The Impact of Obama care on small Businesses and How to Prepare for the Expenses

August 25th 2012 03:29
About Obamacare

Obamacare, also known as the Patient Protection and Affordable Care Act (PPACA) is a federal statute of the US signed by President Obama in March 2010. Obamacare has come up with some new rules for health care in the US. The main purpose behind Obamacare is to make health care products and services more affordable especially for those who are unable to pay for their health expenses.

On the other hand, you will find a lot of opponents of the Obamacare concept. They are of the opinion that the rules defined in Obamacare are going to affect others in the sense of taking away the freedom of many concerned people as well as businesses. Along with that, it can also result in forcing people.


What Does Obamacare Do?

Have a look at some of the rules made by Obamacare below.

It agrees to approve an increased number of generic drugs from the Food and Drug Administration. This will result in increasing competition in the current market so that people can see a drop in prices.

It allows an increase in the drug rebates which US citizens can get from Medicare. Therefore, drugs will cost less.

It comes up with a non-profit grouping which is not controlled by the government directly. The group is known as PCORI. The main purpose of the formation of this group is to examine various types of treatments to analyze how to make the best utilization of money.

It directs restaurant chains such as; Mc Donald’s to display to their customers the number of calories in the food they choose to buy. This way, they can make healthier choices while selecting the menu.

Insurers have got less flexibility in terms of changing the amount of payments from their customers.


A limit has been made for insurers that they can take only some part of customers’ money as profit. This is done in order to ensure that the insurers are not making a lot of money through providing insurance.

Employers are required to list all benefits given to their employees on tax forms.


How Obamacare Affects Small Businesses

Due to limited resources of operating a business, self-employed people who have started their own small businesses can see visible effects of Obamacare on their business. Some of these effects are mentioned below:

High Labor Costs Due To Health Insurance

Of course, the goal of every small business owner is to prosper slowly and gradually. However, expanding the business requires hiring more workforces. But the impact of Obamacare has created some hurdles for the owners of small businesses. Now that they will have to include health insurance as a benefit for each new employee they hire, it will result in adding high costs of labor to their business.

Since hiring more employees is equally important, small businesses will not be able to do so because they will have to pay a lot more to new employees in the form of health insurance benefits. Inability to hire new employees will definitely contribute in creating a hurdle for them to achieve long-term success.

Pay Raises

Due to the advent of new laws of Obama care, the workforce of small businesses will ask them for a pay raise. However, it is always difficult for small businesses to accept their pay raise request in such economic conditions. Eventually, employees will prefer to work somewhere else instead of working for a small business with such low pay. As a result, it is the small businesses that will suffer the loss in the long run.

Less Customers for Fast-Food Restaurants

There are numerous fast-food restaurants that are being run as small businesses. Although large restaurant chains such as, Mc Donald’s and KFC will manage to cope up with this change through implementing creative business strategies, various small restaurants are more likely to suffer the loss. If you are having financial constraints like these restaurants, then Consolidated Credit offer a US based debt relief program.

Since fast-food restaurants are required to display the number of calories their customers are going to consume through their food, this can affect the number of customers entering these restaurants. When customers become aware of how caloric the food is, they will more likely visit such restaurants less frequently. This will directly affect the sales of small fast-food restaurants.

How to Prepare for the Expenses

Since it is important to cope with new laws, you need to prepare well for the business expenses. If you have to manage your small business but are facing debt burden, then debt consolidation can be an option to prepare for future expenses. Consolidated Credit offer a US based debt relief program.
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