What will be the effects of the new health care reform on small businesses and the workers they employ in Merced County?

Published on
October 18, 2010

Beginning in 2014, businesses with more than 50 workers will have to provide health insurance or face a penalty per each full-time employee. At the same time, many of these small businesses are struggling to stay afloat.

This will be one of three fellowship projects that I will work on. For this one specifically,  I will look at what this change will mean for small businesses in Merced County. Will it hurt their business? How will their business continue to survive? I also will look at what kind of benefits businesses with less than 25 employees will see from the tax credits they will receive to help cover a portion of the health coverage for their employees. But will the tax credits be enough for them to continue to stay in business? Merced County hosts an estimated 5,000 small businesses, and, along with agriculture and the public sector, they provide the main economic stimulus for the county.  Many have been shattered, if not downright shuttered, by the implosion of the real estate sector in the last two years.  Between 2002 and 2008, according to Business Week magazine, developers added an estimated 60,000 housing units in the area-mostly fueled by a speculative bubble hovering over the newly found UC Merced.  But home prices fell 42 percent two years ago, and Merced became known as the epicenter of the nationwide foreclosure crisis.

If Merced County is to bounce back from the body blows it has absorbed the past three years, health care reform must prove to be a boon, and not a bane, to entrepreneurship.  The jobless rate is nearly 19 percent, near its historic high, so this project's importance cannot be exaggerated in terms of its ability to explain and analyze the critical nexus between small business and health care reform.