Tuesday, January 29, 2013

How Small Business Is Helped By Obamacare... and Large Businesses Will Be Less Able to Compete Against Them

Small business points at its competitor
It wasn't until the Disease Management Care Blog had read this Jan. 30 Wall Street Journal opinion piece that it realized that its "nano" corporate" status was packed with such futuristic potential. According to the editorialist, American companies should follow the DMCB's lead and be "protean" by dropping old fashioned W-2 employees and substituting 1099 contract relationships.  That way, everyone - including a single person "nano" - can enjoy the upsides of being a corporation and stay below Obamacare's 50 employee pay-or-play $2000 penalty threshold.

Since the DMCB formed it's own corporation more than 5 years ago, it has certainly participated in "protean" business relationships. Once things get underway, the DMCB often discovers that of the many prominent organizations that it does business with really consist of a small core office populated by a few owner-founders, a single administrative aide and one or two payroll folks who oversee the outsourcing of everything else.  While the term "protean" is certainly novel, the DMCB thinks distributed, adaptable and organic business networks have been around for years.

But the WSJ editorial opens a window into an underappreciated consequence of Obamacare and the underlying assumptions of the central planners who run Washington DC.  The DMCB doesn't necessarily think it's bad, but it sure is interesting.

Read on.

While the Affordable Care Act (ACA) was intended to link employment and health insurance, what it has really done is handed many small nimble interlocked businesses another leg-up against their large traditional mainframe competitors. For example, one colleague pointed out to the DMCB that "new" pharma companies are really marketing departments that outsource manufacturing that, in turn, outsources supply management that outsources I.T. that outsources its cloud services. It's the only way they can compete. 

The new economics of health insurance will only accelerate similar trends in other manufacturing and service sectors of the economy.  Toss in the ability of people and capital to move and work across borders and the picture becomes even more dynamic. And in the meantime, Washington DC continues to implement the ACA with a legacy of large companies buying comprehensive health insurance for its employees.

Little did anyone anticipate that the ACA would hamper the success of American big business.

Image from Wikipedia

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