November 28, 2015

What Exactly Is In That Healthcare Reform Bill?

Healthcare plan impacts small businessesYou’ve been hearing about healthcare reform.  A healthcare bill is finally here as I wrote a few days ago.  (See What U.S. Small Businesses Need in Healthcare.)

But so many proposals have been floated, and so many talking heads on cable news shows have discussed various options, that things are confusing.  You may be wondering exactly what is in the healthcare reform bill entered in Congress this past week.

Well, wonder no more.  We’ve got a quick cheatsheet.

The 1,000-plus page plan proposed in the House provides:

  • Employer Mandate: Requires employers to provide insurance or pay a penalty for not doing so. Businesses with more than $500,000 in revenues [payroll] would pay a penalty of 8% of payroll. There is a graduated penalty for firms falling between $250,000 to $500,000 [$400,000] in revenues [payroll] with business with less than $250,000 exempt from the mandate. (The graduated rates are 2% of payroll for employers with payrolls above $250,000 to $300,000; 4% for employers with payrolls above $300,000 to $350,000; and 6% for employers with payrolls above $350,000 to $400,000.)
  • Individual Mandate: Individuals and the self-employed are required to buy health insurance or pay a financial penalty, which would be 2.5 percent of income.
  • Higher Taxes: A surtax would be imposed on higher-income individuals – many of which are small business owners. Individuals earning $280,000 and couples earning $350,000 would get hit with a 1% tax; those making $500,000-$1,000,000 would be taxed 1.5%; and couples earning more than $1 million would pay a 5.4% tax. These tax rates would increase if certain targets are not met.
  • Government Health Insurance: A government-run health care plan is established.

The above is from a statement by Karen Kerrigan, CEO of the Small Business and Entrepreneurship Council.  She goes on to call the proposal currently in the House of Representatives “wholly unacceptable.”  I don’t want to get into the advantages or disadvantages of the proposal — we could argue that all day long — heatedly, I am sure.  I just wanted to give you a cheatsheet of the highlights of the healthcare plan as it currently stands, and as it relates specifically to small businesses.

EDITOR’S NOTE:  The original source incorrectly stated “revenues” when it should have been “payroll” in two places.  Also, it used a figure of $500,000 in one place, but I think it was meant to be $400,000, as that is what other sources refer to as the threshold level for the highest penalty.  So I made the corrections above to indicate the correct information, so as not to mislead anyone.  My corrections are in brackets after the crossed-out items.

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Anita Campbell - CEO

Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of

17 Reactions

  1. I want to thank Karen Kerrigan for speaking out! How could they call it a “reform” when it is an intrusion of our individual rights? I recommend you to take some time and listen to Dr. Leonard Peikoff’s talk on health care in 1993. Time flies…

    Anita: Thanks for the quicksheet. I need this kind of information in order to plan for my future in America.

  2. Thanks for sharing this ver important info on the possible future. This bill could have a huge impact on especially small businesses.

  3. There are two issues here: One is the characterization of the tax burden. The more important issue is whether the health system should be financed through employer-pays plans at all.

    With regard to the “cheatsheet’s” observations, I wonder about the phrasing “…higher-income individuals — many of whom are small business owners.” What is the basis for the adjective “many”? What proportion of small business owners earn more than $500,000? $250,000? My guess, and I admit it’s only that, is that this would affect a pretty small percentage of small business owners.

    This issue actually came up in the 2008 campaign, with charges that Obama’s tax plans would hit many small business owners. Remember Joe the Plumber? One look at the numbers concluded that the proposed taxes would hit about 2 percent of small business owners, see It would be helpful, rather than spooking people with words like “many” (also lazy writing), to actually state what the numbers are and, as well, to state what the additional burden would be. I realize this takes some actual research.

    More important, our reliance on employer-paid health insurance is a huge drag on how we finance health care. It certainly does hit our competitiveness — compare what it costs to build a car in the Detroit with what it costs just across the border in Canada. Rethinking the way we finance health insurance should be a high priority. Unfortunately, should and political reality are totally out of alignment in this case — so much the worse for us.

  4. Hi Gary,

    I was trying to keep this non-political. This was the closest I could find to a quick summary of what’s in the bill, and I didn’t want to have to read a 1000-page plus bill and write everything in my own words.

    As far as your objection to the word “many” — I note that it says many not most. Even if “many” is 100,000 small business owners, the word “many” is accurate enough in my book. The spirit of it is that it will touch the most successful small business owners — the ones that everyone is always pointing to and claiming “create jobs.”

    Right now we are being manipulated by just about everyone — BOTH political parties as well as insurance companies. They think we’re all rubes and too stupid to see through their manipulation — on BOTH sides of the aisle and their respective lobbyists, too.

    Let’s not turn everything into an argument — people need facts right now, not arguments.

    Your objection to that word is noted — let’s move on now please. :)


  5. It is a shame that some Americans are so gullible, to the outlandish propaganda and lies spat in the newspapers, television and radio about Obama’s health care agenda. They have demonized the British, Canadian and other worthy plans. Hidden under a disguise cover, these radical entities are determined to keep the special interest organizations in absolute power. Comprising of the money-draining profitable insurance companies and their rich stockholders. They don’t want any changes to the broken system of medical care, because it will hurt the status quo. I was born in England, in the county of Sussex and until the inception of the European Union and the European Parliament dictating to Britain. That they must accept millions of foreign workers, the nations medical system was exemplary. I never had to wonder if I would have to file bankruptcy, to pay my medical bills, or listen to the incessant ring of debt collectors on the phone.

    On several occasions I ended up in the cottage hospital and their was never a cost applied to it, never a ream of paperwork. Incidentally, I choose my own doctor where I Lived. The longest I waited for surgery was three months, as it was not an emergency. No doctor, no hospital or specialist asking me for my Social Security number, drivers license or if I was covered by a predatory for-profit insurer. No premiums, no-cops and pre-existing condition clauses. Yes! Didn’t have a private room, but who cares? Today the British Isles is being submerged under a barrage of legal and illegal immigrants, who have never paid into the system, have caused some rationing. Prior to the importation of foreign labor my trips to doctor, to hospital, the eye or a dentist was paid from my taxation. Unless we pass a national health care agenda, Americans will never know what it’s like to breeze through their lives, without worrying about paying for health care? Tell your Senators and Congressman you want an alternative to the–GET RICH– insurance companies, before a Universal health care is killed. 202-224-312 REMEMBER THE INVESTORS AND STOCKHOLDERS DON’T WANT THEIR PIECE OF THE $$$TRILLION$$$ DOLLAR PIE DISTURBED. EVEN SOME POLITICIANS HAVE THEIR DIRTY FINGERS IN THE PIE?

  6. My main problem with the current health care discussion is the concept of a mandate. This country was built on the concept of freedom, so why are we okay with the government telling us we have to have health insurance (or pay a penalty)?

    Not to mention that the surtax on higher-income individuals is bound to backfire. The more money people make, the more reason they have to hire smart accountants who help them avoid taxes like these.

  7. Hi Anita
    I’m always a little concerned about joining these types of discussions (as in political), but I appreciate that you want to keep to the facts. I don’t know that it will ever be possible, but if we take the position that we want the greatest good for the greatest number of people, something cool might be possible. That’s naive to a certain degree, but we are a smart nation of smart individuals who should be able to work together to make a better system. I don’t know the answer nor will i pretend to, but it should be possible.

  8. Re: Robert Brady’s comment on mandates. I’m not going to argue for or against mandates, but I do want to explain the economic argument for it. The main issue is adverse selection. On adverse selection: It is likely that, without a mandate, those who think they are least likely to need health care, of who do not think they can afford it, will not participate until the point where they think they might need it. E.g., young people will likely not participate until their thirties or forties. Note, this is rational behavior (without a mandate) not cheating (except in, perhaps, a moral sense). For the period of non-participation, they are free riders on the system: they will eventually need it, but don’t contribute to its current costs. Requiring everyone to participate, insures that there are no free riders.

    Now, about freedom: We have taxes for all sorts of things. (They should probably be called dues, instead — your share of the costs for belonging to this club, i.e., the U.S.) Like a club, we have a board (called Congress) that determines what our dues are. If you don’t like the particular choices (I have hated many of them over my 66 years), you can try to influence or change the Board. Which is what the politics of this debate is about, after all. It’s about making sausages.

  9. To the Brit who thinks Americans are gullible – I can only find humor in your willingness to wait three months for surgery and consider that to be adequate care – I lived in your country for the longest 6 months of my life – had to visit a dentist – and it was like visiting a pre-historic torture chamber – the technology and services available there were deplorable for the time. I’ll take our system and the challenges it has – because I have choice – the system as you describe it will result in the quality docs going elsewhere to provide services where they can get paid reasonably (Medicare isn’t the paycheck they wait for – it’s the commercial insurance that helps keep them afloat). I want choice – and the best care available in the world – and I don’t have to travel far today. Tommorow – post-Obama plan – well I guess India is an option….boutique hospitals with some of our finest phsyicians are already open there.

  10. Health is a right of every individual not a responsibility.

    The government should not coerced the citizens from paying for what is due to them. It is government’s responsibility to allocate budget sufficient for such right.

    The bill covers or will benefit only those who are employed or with income. What about the unemployed and without income?

  11. This is already happening. The IDS has a ruling that, if the employer agrees, a terminated employee with 200 hours accumulated vacation must use that money to buy a health care plan. This happened to me as an employee of the university of Minnesota. So, not being close to retirement and needing to work, I lose more than twelve thousand dollars I could have applied to restructure my finances in preparation for that low paying job waiting for me at the end of unemployment insurance benefits. This is perfume on a pig.

  12. Great job America, now health insurance is guaranteed to stay unobtainable to the people that need it the most.

  13. Any tips or advice that can help is always appreciated.-Healthcare Help

  14. All of you make very interesting points however if utilized correctly the healthcare reform can help small businesses immensely when coupled with a Professional Employer Organization (PEO). PEOs can shelter small businesses from health increases. PEOs are well versed in all aspects of the healthcare reform and can help small businesses understand the new policies as well as get them the maximum tax credit for each business.

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