A Quantitative Analysis Of The Affordable Care Act's Effects On Small Businesses

Abstract

The focus of this paper is to study the Affordable Care Act's effects on small businesses including compliance mandates and the options available. Looking at the Small Business Health Option Programs, I question the option variances based on the entity type, size of the small businesses, and type of exchange based on the businesses state of operation, hypothesizing that the effects would vary based on each factor. Additionally, I examine the tax impacts these small businesses are faced with because of ACA compliance. To answer these questions, I created 12 hypothetical companies each varying based on the entity type, company size, and type of exchange. Using historical data for the microbrewery industry, I determined pre-ACA expenses for small businesses to provide health insurance to employees and compared expenses post-ACA after these hypothetical employers purchased health insurance over the exchanges. My findings lead to the conclusion that purchasing health insurance for employers was less expensive post-ACA than pre-ACA and created a greater tax liability for each entity. My hypothesis proved to be false as the ACA's effects on small businesses did not vary across company size, entity type, or type of exchange. The results of this study are limited to the assumptions made and cannot be applied to all small businesses.