How Firms Will Adapt to Avoid ObamaCare’s Mandates (and Drive up Its Cost)

An oped in today’s Wall Street Journal explains:

How big can a company get with just 50 employees? We’re about to find out.


Thousands of small businesses across the U.S. are desperately looking for a way to escape their own fiscal cliff. That’s because ObamaCare is forcing them to cover their employees’ health care or pay a fine — either of which will cut into profits and stymie future investment and growth…


“Going protean” offers a better strategy for many businesses. Owners of protean companies create a core of strategic employees who manage the big‐​picture elements of the enterprise — the culture, business model, product mix, vision, strategy, etc. This core then outsources the business tasks to other corporations…


Non‐​core tasks could include things like accounting, marketing, product development, manufacturing, IT, PR, legal, finance, etc. There is almost nothing that cannot be outsourced…


These new contracts will be a mix of large corporations, small businesses, micro‐​corporations and even nano‐​corporations (an individual doing business as a corporation). But to be a protean solution, it must involve a corporation‐​to‐​corporation relationship…


In the context of ObamaCare, a small business could go protean by offering current employees contracts for doing their current work as a corporate entity instead of as an employee…


[A]s government continues to impose itself into the marketplace and reduce the freedom of the commercial sector through statist programs like ObamaCare, businesses will have to look for creative solutions to survive. Going protean is only one way, and others will emerge.

Keeping the core company below 50 full‐​time employees will allow such companies to avoid the employer mandate. But it will also drive up ObamaCare’s cost, because most of the workers in the new corporate entity will be eligible for government subsidies through ObamaCare’s health insurance “exchanges.” This will drive up the cost of ObamaCare wherever those subsidies exist.