The Patient Protection and Affordable Care Act imposes draconian, European-style mandates on businesses that will impose higher costs, destroy profit margins and, as this article reports, prompt employers to fire workers and shift others from full-time to part-time. But I contend that entire businesses will close as married businessowners respond to the penalties and financial disincentives.
The employee mandate to provide full-time employees with health insurance covers businesses with 50 or more full-time workers starting in 2014. However, there is an aggregation policy (implemented to discourage circumvention of the rule) whereby the number of employees working for multiple businesses under common ownership will be aggregated (even if the businesses are totally separate and even in totally different industries and locations). Furthermore, the tax code presumption that each spouse in a marriage has an ownership interest in the other spouse's business may lead to Internal Revenue Service scrutiny over the businesses of married couples (as opposed to singles).
The effect of this provision will be to penalize and discourage small business owners, and a perverse side-effect will be to particularly discourage entrepreneurial couples. Married business owners who own multiple businesses within the marriage will now be at a competitive disadvantage.
It is no longer outrageous to think that there are married couples who will divorce in order to get around tax code assumptions, presumptions by the enforcement arm of the Internal Revenue Service or to otherwise rejigger the risks borne by each spouse. This may be particularly attractive to couples who work in different states. The new normal, the new economy, is making people increasingly consider taking jobs (or run businesses) in different states.
The ObamaCare owner aggregation policy will really force business owners to obey the mandate, pay the penalties for noncompliance, or as what will become far more likely, close entire businesses because the mandate will remove profit margins. The cost per employee for health insurance is already significant, and aggregation can impose costs of hundreds of thousands of dollars per year in insurance premiums alone. Therefore, shutting businesses may result in net savings to the other remaining businesses if the aggregate headcount can be reduced below 50.
Regardless of what government bureaucrats -- plutocrats -- try to do, it is human nature to seek the most hospitable, convenient and economically optimal environments in which to live, work and play. It sounds shocking now, but strategic divorce would be among the economically rational responses to the ObamaCare mandate.
Eric Dixon is a New York attorney specializing in regulatory and investigative matters.