March 26, 2010

Just like the rest of the country, small businesses also have been split on the recently passed healthcare reform bill.  Case in point: the National Association for the Self-Employed (NASE) conducted a survey of its microbusiness members (businesses with fewer than 10 employees) and there were differences of opinion.  Sixty percent of the members were opposed to the bill.  Twenty-eight percent were in favor, and the rest weren’t sure.

That was just one survey.  But it’s a perfect example, because it shows that just being a certain size of business doesn’t mean you have one single set of circumstances or a single unified position.  We small businesses are not some homogeneous group all with the same viewpoint.  When it comes to an issue with the complexities of healthcare, there is no “typical” small business. 

For instance, some small businesses already provide coverage for their employees, and may even feel that their company insurance plan is so good it gives them a competitive advantage in the marketplace when hiring. Those small businesses may see no reason for government intervention, feeling they may have their employees well covered. Other small businesses may have been priced out of the market and not able to provide coverage for employees. Those who are self-employed may be located in a state where the individual coverage they have to buy is pricey or next to impossible to obtain due to pre-existing conditions or other circumstances.  And the list of differences goes on….

Due to these sorts of differences, some small business organizations such as the Council of Smaller Enterprises (COSE), a 17,000-member small business organization here in Ohio that I belong to, deliberately held back from taking a position for or against the bill before its passage.  COSE’s leadership realized that different members would have different positions on healthcare.  It would be impossible to speak for each small business equally.

All the different circumstances, of course, did not stop the press releases being issued right and left by opponents and proponents alike.  Press releases with titles  like “small businesses in favor [against] healthcare bill” or “healthcare bill helps  [threatens] small businesses” and other propaganda-like pronouncements were designed to give the impression that ALL 28 million small businesses supported or opposed the healthcare reform bill.

So, with all the different viewpoints, can we summarize what this bill means?  The bill has some provisions that large numbers of small businesses will undoubtedly welcome. On the positive side, according to sources such as a statement from Senator Mary Landrieu,  and the Associated Press summary, are these provisions:

• NO PRE-EXISTING CONDITION EXCLUSIONS: Insurance companies will not be allowed to deny or rescind coverage based on preexisting conditions or health status.
• INSURANCE EXCHANGES: Under the Senate health reform bill, states may immediately create insurance exchanges — and must create them by 2014 — to pool small businesses with up to 100 employees, or up to 50 at state option, together to spread risk.
• MAJORITY OF SMALL BUSINESSES EXCLUDED FROM FEES FOR FAILURE TO PROVIDE COVERAGE: Employers with more than 50 employees that do not provide health coverage will have to pay a $2,000 per employee fee.  Since the majority of small businesses have under 50 employees, they will be exempt from this provision.
• SMALL BUSINESS TAX CREDIT: In the short term, there are tax credits available.  Beginning in 2010, a tax credit will be available for small employers with 25 or fewer employees with average annual wages less than $50,000. The full credit will be available to employers with 10 or fewer full-time employees with annual wages averaging $25,000 or less. In 2014, once the exchanges are up and running, small businesses that participate in the exchange will receive a tax credit for two years.
  

But the wild card in healthcare reform is cost.  The number one ranked issue for years for small businesses  -- in survey after survey -- has been cost of coverage. While both sides on the healthcare issue make claims about the cost of healthcare under the new law – with proponents saying costs of insurance coverage will go down, and opponents pointing out that costs in the form of taxes are bound to go up – I think it’s fair to say that the size and scope of the reform is so massive, and our understanding of it so new, that it is likely we just don’t know all the complex reverberations on the economy, taxes and coverage costs over a period of years.  It’s difficult to predict the full extent to which all those costs and taxes, taken in totality, will impact small business pocketbooks down the road. Even the estimates of the Congressional Budget Office have been described as “more art than science” and filled with uncertainties.

Yes, cost is the wild card in healthcare reform – and it’s why some small business owners, even those who welcome the reforms, are left wondering whether the cure will turn out to be worse than the ailment.

Join the conversation ( 3 )

• Martin Lindeskog 1 year 10 months and 14 days ago

  

  Shouldn't the goal be a more simple and easy to use health care system for all parties? I have seen the consequences of a regulated health care industry here in Sweden. A positive sign is that the pharmacy state owned monopoly is now dissolved and you could have alternatives to the old system.

• Julie Rains 1 year 10 months and 10 days ago

  

  I am hopeful that the relative cost of providing health insurance stabilizes and levels the employee-attraction playing field so that small businesses can offer compensation packages that are competitive with larger companies. I find some of the concerns about community ratings / exchanges odd since those are long-standing practices anyway -- this should just expand the pool of healthy people and give a broader base upon which to spread risk, which I would presume is the purpose of insurance.

• Thursday Bram 1 year 10 months and 10 days ago

  

  I've seen a lot of arguments that the new legislation will bring down overall costs because there will be so many new policies, but I can't say that I'm confident of that. Over the last decade, I've seen costs go up for many businesses on such a regular basis that it seems impossible to escape that trend.