What Will Health-Care Reform Do to Your Small Business?

What Will Health-Care Reform Do to Your Small Business?As the health-care debate rages on in Washington, I thought it would be a good time to take a quick look at how things are shaping up. Both house of Congress have passed bills. President Obama has invited Congressional leaders from both parties to a meeting on February25th to discuss the issue and attempt to iron out their differences. (The meeting is supposed to be televised.)

The Wall Street Journal reports that the Senate bill did get some support from big corporations and business groups. However, the House bill, which places more stringent requirements on employers to offer their employees health insurance, has met resistance from businesses both large and small.

What’s bugging business about the current bills? Big businesses don’t like a provision of the Senate bill that would tax a government subsidy on drug benefits for retirees; the accounting adjustments it would require could mean that many companies’ earnings would drop steeply in 2010. Big companies are also concerned about new taxes and fees in both the Senate and House bills.

What about small businesses? Some small-business groups, such as the U.S. Chamber of Commerce, contend that health-care reform will increase small business owners’ costs, making it harder for them to hire and retain employees. However, most taxes in the Senate bill are targeted at health-insurance companies, drug companies and other big corporations in the health-care system-not at small companies.

White House spokesman Robert Gibbs has said future negotiations to come up with a final bill must focus on how to control costs. The Senate bill has no public option (government-run health care), but the House bill does. Making sure insurance alternatives aren’t too expensive will be crucial if the House is to give up on the idea of a public option.

Here are the key elements of the Senate bill that specifically affect small businesses:

  • Creates health-insurance exchanges where individuals and small employers could buy coverage.
  • Requires employers with more than 50 employees to provide coverage or pay a fine of up to $750 per employee.
  • Expands tax credits to help small businesses with up to 25 employees (and an average wage of $50,000 or less) buy coverage.
  • Requires insurers to cover all comers, including people with pre-existing medical conditions.

SInce there’s so much rhetoric flying back and forth, a good place to keep up-to-date with changing proposals is the Kaiser Family Foundation Web site, which has detailed and frequently updated information about both the House and Senate plans.


Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.

11 Reactions
  1. “Some small-business groups, such as the U.S. Chamber of Commerce, …”

    Small business groups like the U.S. Chamber of Commerce?

    Come on now, give me a break. This is the organization that funneled $30 Million from the medical giants to produce ads against any reforms to the health care crisis.

    The U.S. Chamber of Commerce is the astroturf of the small business world.

  2. Good recap Rieva. I hope this moves forward as it has to start somewhere. This weekend’s news about rate increases for individual health plans seems to have spurred some additional interest in making something happen.

  3. Small business on average pays 18% more per employee for health insurance than big business (over 50 employees). There is nothing in the senate or house bills that changes this equation, and to the contrary, my questions to two separate companies that broker health insurance for small businesses (neither of these companies have a dog in the hunt – they just match people w/ insurance), both of them are confident that fees will go up, not down.

  4. Rieva- Nice article about our current health care bills. With that being said, most small business owners I talk with are very concerned about the tax penalties, and find the tax credits absolutely no incentive to hire. Also, lets all be aware of any program’s “unintended consequences”. Plus any program that says “require” so many times is scary.

  5. I’m all in favor of health care reform, but am constantly amazed at how complex these bills are, and therefore how much there is to fight about before we can accomplish anything. Also re Kip’s comment: does anyone know how they determine whether the penalties and incentives stated will actually bring the results they intend?

  6. Anytime the feds are involved – our costs will go up. Even if the true healthcare costs are lowered (which I have serious doubts about) – the cost of managing the government paperwork and paying accountants and attorneys to make sure we are doing what we are required will go up.

    As Susan is pointing out – it is so complex now – just imagine what the requirements document for your business will look like!

    I see more businesses work with contractors and outsourcing already as a means to get work done. And, perhaps this is a blessing of regulation – the more the feds get in the middle of things the more entrepreneurial thinking we have to be to get them out.

  7. The more the government gets involved, the higher the price tag will get, plain and simple. (Even if it’s just increased reporting and regulation)

  8. Government does not belong in the healthcare business. (nor the car business nor the banking business…..)

    So many powerful recommendations have been made by smart, caring people (in the private sector, I might add) as to what to actually address to ‘reform’ our system. None of them require government intervention.
    Here’s a idea… let’s start with those ideas first!

  9. Where is the job’s summit? Yes, healthcare has been a problem for a long time, but which problem is more pressing, health care or jobs? The politician’s are showing a complete disregard for basic management principles. It’s no different than a company focusing on its health care plan while it goes out of business for lack of customers. How responsible is that?

  10. Barack Obama along with all his liberal mafia ought to be ashamed of themselves. Furthermore this is a total outrage. I had been under the belief that once the president takes office he has to make an oath to support and also defend the constitution of our great country. Nowhere inside the Constitution did it grant the federal government the power to enact as well as implement laws and regulations like the health care reform bill. I believe these power mongers shall be in for a genuine surprise in November. Congratulations on the collapse of your political careers.

  11. Orlando Marguardt

    Thankyou, that’s really good info, thanks.