Wednesday, September 2, 2009

Dispelling the Myths of Health Care Reform: Cost – Small Businesses

Myth: Small employers will go out of businesses because of health care reform.

Fact: Health care reform will ease some burdens on small businesses, provide tax credits to help them pay for employee coverage, and help level the playing field with big firms who pay much less to cover their employees on average.

Throughout the country, small businesses are struggling as health care consumes a greater share of their payroll costs. The high costs are making it impossible for many small businesses to provide insurance to their employees, leaving millions of Americans without the affordable health care they need and deserve.

Nearly one-third of the uninsured, 13 million people, are employees of businesses with less than 100 workers. From 2002 to 2007, the percentage of small businesses offering coverage dropped from 68 percent to 59 percent, while 99 percent of larger employers were able to continue to provide coverage, due in large part to the fact that small businesses pay up to 18 percent more per worker than larger employers for the same health insurance policy. For those small employers who do offer coverage, more than half have switched to plans with higher out-of-pocket costs for employees or to plans that cover fewer services.

Health care reform will bring more affordable options to small businesses.
  • Small businesses that meet certain criteria will be able to purchase health insurance through an “insurance exchange” where they will be able to choose among a number of plans that provide better coverage at lower costs.
  • Small businesses who already provide coverage will receive a tax credit to alleviate the disproportionally high costs.
  • There will be financial incentives, pay-or-play provisions, for medium and large employers to provide coverage; however, a vast majority of small businesses will be exempt from these provisions.
It should be noted that the proposed public option plan will not be an option for employers who are already providing health care for their employees. These employers will not be able to move their employees into the public option. However, they will see their costs go down because of the added competition and benchmarks that the public option will bring to the market.

Not being able to offer the health care employees need and want is hurting small businesses. Benefits help small employers with recruitment and retention, while employees with benefits have increased productivity. Health reform will improve both the health and economic well-being of small business and their employees by expanding coverage and reducing costs.

Information provided is according to reports released by the US Department of Health and Human Services and the White House.

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