The National Federation of Independent Businesses and the U.S. Chamber of Commerce say the health care reform bill, dubbed America’s Affordable Health Choices, could have a devastating effect on the nation’s smallest employers and derail the economy for decades.
“House Bill 3200 falls short – and it’s disheartening how people keep saying this is a great bill for small business. After reading the 1,000-plus pages, I can tell you that this bill has an employer mandate and payroll taxes that will depress jobs and wages,” said Michelle Dimarob, manager of legislative affairs for the NFIB.
The bill requires employers to carry insurance, she said, but not just any policy. In some cases, the policies they currently carry would not meet the requirements of the bill.
“The bill outlines the minimum insurance plan, based on the plan that Congress gets,” she said. “It’s a very different package. The cost of the plan is going to be much higher than what many small businesses now offer.”
The bill requires employers to pay more than 72 percent of the premium for individual insurance and 65 percent of the premium for family plans.
“This is not a health care option, at all,” she said. “It’s growing government. We receive hundreds of phone calls from our businesses saying that they don’t want more government involvement in their business.”
If an employers’ insurance benefit is deemed unacceptable by the government, or if they don’t cover families, or if they don’t offer insurance – the bill requires a tax penalty.
“There is a payroll tax if there is no qualifying coverage,” said Bill Rys, tax counsel for the NFIB. “They will be penalized. Census data shows that people with five to seven employees will be exempt.”
The payroll tax is graduated: it starts at 2 percent for companies with payrolls of $250,000 to $300,000 and goes up to 8 percent for companies with a payroll of $400,000 or more.
But the bill also pays for health care reform in another way: taxing incomes. Rys said that there will be a surtax on individuals who make $208,000 a year or $350,000 for people who file jointly. The tax starts at 2 percent and then goes up to 5 percent for people who earn more than a million.
“The bill also says that the Congress doesn’t see the savings from reform, that the surtax can go up an additional 2 to 3 percent in the future,” he said. “So it’s a double whammy for small business.”
Most small business owners pay their business tax at the individual level,” he said. “This is a tax on income, not on profit. It’s going to lessen the amount of money that small business owners can put back into their businesses.”
The fear, Rys said, is that small business owners – who create most of the jobs in the nation – will hire fewer people, decide against expansion and take other steps to curtail the effect of the tax.
“Profits are at a 35 year low,” he said. “Access to credit is at an all time low. Businesses are already entrenched, trying to ride out the recession. If they have to take on this additional expense, many will close at the end of the day.”
Both business groups say they want reform – that rising costs make obtaining health benefits difficult for small businesses.
“But this bill, this won’t help business,” Rys said. “This will harm most of them, and shutter a large percentage.”
The NFIB believes reform should come in the form of insurance industry regulation, an even playing field for small businesses and a national pool for purchasing insurance.
“Right now, there is very little competition in this market,” Dimerob said. “It’s difficult to obtain small-group coverage – and the premiums are about 18 percent higher. We want reform to look at that area.”
The U.S. Chamber is addressing its concerns about the bill by launching the Campaign for Responsible Health Reform, a multi-million dollar advertising, media and grassroots campaign in several states, including Colorado.
“We need to reform our health care system to bring down soaring costs and ensure more people in Colorado have access to quality care,” said Bruce Josten, executive vice president for Government Affairs at the U.S. Chamber. “But a government-run plan will cause businesses to cut jobs in Colorado and could seriously harm our economic recovery.”
A recent CNN survey found that 8 out of 10 American workers are satisfied with their employer-sponsored health plan, yet Congressional proposals would erect a government-run plan that would have an unfair advantage over private plans, eventually crowding them out of the market. Even if employer-sponsored plans survive, consumers are likely to face higher costs as health care providers shift costs to private payers due to artificially low government-run plan reimbursements.
“Preserving employer-sponsored health plans is critical for ensuring quality health care,” Josten said. “Government-run plans in other countries have been found to make people wait long periods for consultations and treatments-and deny cutting edge treatments that can make the difference between life and death. That’s not responsible reform.”
The Campaign for Responsible Health Reform is running print and online ads, organizing events, placing opinion pieces in local media outlets, and generating letters and calls to members of Congress in Arkansas, Colorado, Louisiana, Maine, and North Carolina. Chamber members have already sent more than 78,000 letters to their legislators opposing a government-run plan. The overarching message of the Campaign: a government-run plan will shut down employer-sponsored plans and hurt job creation and economic growth.
But the White House disagrees, in a study released during the weekend, they say that small businesses are the ones who will benefit most from reform. The bill provides an exchange that will offer better benefits at lower costs to small businesses. Employers who do offer insurance benefits will receive a tax break as well.
But President Barack Obama wants to know what small businesses think about health care reform — and is using new technology to do it.
Interested business owners can share challenges faced by smaller firms in the health insurance market, and the likely impacts of reform at www.whitehouse.gov, and through LinkedIn, a social networking community for professionals that has 12 million in small business owners and employees as members.