The Supreme Court's decisioncame as a surprise to many small businesses across the country. But let’s not confuse the issue as a constitutional matter. The court didn’t say that the law was good or bad, it ruled that the Affordable Care Act is, for all intents and purposes, a tax.
Let’s take the politics out of this (as politics just muddies the water) and recognize that what today’s ruling means is that taxes are going up – especially on those who create the most jobs.
At Greenleaf Book Group, the 40 person publishing company I started 15 years ago, we’ve seen our health insurance costs rise dramatically since the bill was enacted and expect it to continue in coming years. Whether we call this a tax or cost of doing business isn’t the point, the reality is that the bottom line is under increasing pressure.
After the shock wears off, we’re all going to have to show up to work and get back to the business of doing our jobs. So what will that look like for those of us on the front lines of the economy?
Hiring Will Slow: With the employer mandate hitting companies with more than 50 employees, we’ll see some small companies decide to outsource or replace employees rather than push for organic growth. While this won’t stop hiring, it will be yet another force slowing its growth. Look for many more part-time and 1099 employees and a general rise in unemployment.
Increase in Short-Term Uncertainty: Despite the supposed clarity of “any decision,” the political machines of both sides will ramp up rhetoric, negative ads, scare tactics and near-term inaction. This will cause more money to sit on the sideline until after the election in November.
Simplification of 2012 Campaigns: Both sides will be able to make this a single-issue race. The Democrats will argue for strengthening the law and an increased role of government. Republicans will argue for repeal and smaller government. The referendum on the direction our country takes will be huge this November.
"It’s important to remember that this isn’t unchartered territory for small business. We’ve seen storms before. None of the predictions above mean abject failure; simply that the landscape is more challenging."
Increased Risk of Double-Dip: Capital will continue to sit on the sideline, and look for more to be held in anticipation of what happens in November. Without capital invested, the jobs numbers drop along with GDP.
Decrease in Capital Investment: As the capital gains tax rate looks to jump in 2013, this will limit risk taking and investment as the upside is so much smaller. Look for investors to close out positions sooner rather than later, pushing markets down further.
Employers Will Cut Insurance: While many of us will fight to keep top-notch benefits for our staffs, some will simply not be able to afford the increased costs that have already begun and are sure to continue to increase. Individuals will be pushed out of group plans and onto the government system.
Some Insurers Will Stop Writing Policies: Look for many companies to follow Principal Financial Group’s lead and get out of the health insurance space. When premiums are going up this fast, and insurers can’t control the pools, why absorb that risk? Shareholders will push management to focus on writing policies that aren’t tied to the whims of government.
But it’s important to remember that this isn’t unchartered territory for small business. We’ve seen storms before. None of the predictions above mean abject failure; simply that the landscape is more challenging.
Greenleaf Book Group will continue to succeed in this new environment – for better or worse, we’re getting used to this kind of uncertain climate. We’ll continue to hold onto cash and postpone deploying capital until after the election. We’ll have to keep a close eye on hiring full-time employees as we will be very hesitant to cross the 50-person threshold and become subject to the employer mandate. We’ll keep offering top-rated health insurance to our staff as long as we can afford to do so.
Despite these challenges, our job will still be to help our authors write brilliant books that sell a ton of copies so that we (and our authors) can make loads of money. The job of every small business owner is to show up to work and find a way to make money given all this noise. There will be casualties; some will fail and others will quit. But this is when our mettle is tested and we will find a way.
Clint Greenleaf is the founder and CEO of Greenleaf Book Group and a member of the Young Presidents' Organization. GBG, an Inc. 500 Company, is a leading publisher and distributor with several New York Times and Wall Street Journal bestsellers.
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