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(HealthNewsDigest.com) – Proponents of America’s Affordable Health Choices Act of 2009 (H.R. 3200) argue that it will make healthcare more affordable for the average American. But what will it do for small businesses?
According to three in four small business owners surveyed by SurePayroll, the current bill won’t do them much good. When we asked our customers if they were in favor of the proposed legislation, nearly 75% gave a definitive no. Take a good look at the bill and you’ll clearly see why the majority of this group (a group that creates up to 80 percent of U.S. jobs, mind you) feel H.R. 3200 jeopardizes small business.
Costly Proposition in Tough Economic Times
Unlike big businesses that will be virtually unaffected by H.R. 3200, their small business counterparts will be burdened with new expenses or penalties during these tough economic times. The additional costs will effectively stunt the growth of businesses that are creating our country’s jobs and decimate those that have been struggling to weather the economic storm.
Let’s start with the cost inherent in requiring employers to offer healthcare to all employees. Small businesses that are not able to foot the bill for health insurance now are not going to be able to afford it several months from now. Where would they come up with the new funds in times like these? According to the National Federation of Independent Businesses, this mandate could cost 1 million jobs from the small business sector.
But it’s not just those small businesses that are impacted. The act would also punish those already providing insurance, forcing them to cover at least 72.5 percent of costs for individuals and 65 percent for family plans. Any business providing insurance that covers less than that will be stuck with a penalty.
In addition, there’s the payroll penalty for businesses that just can’t comply with the provisions. Regardless of how profitable the business, if their payroll exceeds $500,000 and they aren’t providing insurance, they will be penalized. With the chance of incurring additional taxes, employers will think twice before making additional hires or increasing wages. This certainly doesn’t provide incentive to grow business and expand the economy.
New Solutions: Slow Down to Go Faster
If we are to solve our healthcare crisis while avoiding further economic downturn, legislators need to spend more time considering H.R. 3200’s economic impact on small business. It’s a complicated issue and they would be wise to slow down in order to go faster. A few things for them to think about:
First, the government can eliminate waste and reduce costs by getting rid of state-based regulations and moving to a federal regulation system. One regulatory body with one set of procedures and policies applied evenly across all states will improve operating efficiencies for everyone. Plus, it will open up the market, giving access to many more carriers at many more price points.
Second, the government can provide equal tax deductions to individuals, making health costs more affordable so we won’t have to pass the buck to our small businesses. Currently, individuals who get insurance through employers that offer a section 125 plan get a tax discount on medical expenses. Individuals who purchase non-employer sponsored plans don’t, essentially giving them a disadvantage that can cost them a third more.
Third, the government can create purchasing pools that will allow small businesses the opportunity to access affordable health insurance. As it stands, small businesses pay significantly more than big businesses. A purchasing pool will help drive down costs for small businesses attempting to get at least basic coverage for its employees.
Defining healthcare legislation is definitely not cut and dry by any means. Many interests must be taken into consideration. However, rushing into legislation is not the answer. We must work together to pass an act that supports all forms of business in our country – not just big business.
Small business is vital to the American economy. Let’s not force them out of the marketplace simply because we want legislation right now. There are solutions to this problem and we must explore them before taking any definite action.
About Michael Alter
Michael is responsible for the overall business model development, strategic planning, and day-to-day operations for SurePayroll. He joined SurePayroll in 1999 after five and a half years with McKinsey and Company, where he was a founder and leader in the Service Operations Practice. Prior to receiving his MBA from the Harvard Business School, Michael worked in various sales positions at IBM and in Brand Management at P&G. He holds a bachelor’s degree in economics from Northwestern. Michael is a member of the Young President’s Organization, Executive’s Club of Chicago, The Economic Club of Chicago, The Independent Payroll Providers Association, and the American Payroll Association. Michael is a nationally-recognized spokesman on small business issues. He is a columnist for INC.com and appears regularly in media across the country, including Bloomberg TV, the Wall Street Journal and Entrepreneur Magazine.
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