Worries of cost, limitations rampant among small companies
Like the freon in the air conditioners Stan Johnson's company installs,
his support for health care reform that's been proposed has evaporated.
Johnson made that clear when he testified before Congress' Small
Business Committee about the stimulus package as a representative of the
Air Conditioning Contractors of America; the last question posed to him
was about health care.
"In February, we supported what [President] Obama was floating out as
possible reform of health care. Today, what's on the table our industry
no longer supports," said Johnson, owner of Stan's Heating and Air
Conditioning Inc. in Austin. "The support has evaporated because it is
over-reaching and it is no longer reform, it is a take over."
Johnson's thoughts echo sentiments held by many small business owners
and the associations that represent them, many of which have long sought
health care reform, but are concerned about many of the components in
the America's Affordable Health Choices Act, H.R. 3200, which was
introduced July 15 by Rep. John Dingell, D-Mich.
The main criticisms include:
* The bill's employer mandates and penalties would be too costly for
cash-strapped small business.
* It would limit employers' health care options.
* The legislation does not appropriately address health insurance
reform.
Keeping track of bills
Perhaps compounding fears within the small business community is that
there are multiple versions of the bill on the table.
As of July, there were three versions of H.R. 3200 circulating in the
House, one in the Senate and another is expected from the Senate Finance
Committee, which has jurisdiction over Medicare. Lawmakers expect to
have a bill to present to the entire Fiance Committee on or about Sept.
15. While no one is certain how that bill will end up, small business
proponents have widely criticized H.R. 3200 in its current form.
At the end of July, the National Federation of Independent Businesses
said it opposed the bill "because it threatens the viability of our
nation's job creators ... and fails to address the core challenge facing
small business - cost."
NFIB is also concerned that a public health insurance option, which
Obama has said is an essential part of reform, could hurt the private
insurance industry. Instead, some business and physician organizations
are pushing for greater reform of the private insurance market so that
insurers can provide more health care options. But others, including
U.S. Rep. Lloyd Doggett, D-Texas, say a public option will help small
businesses in the long run.
"For many small businesses, the new Health Insurance Exchange will offer
lower-cost, higher-quality coverage," Doggett said. "Under the current
failed system, too many small businesses cannot secure coverage for
their employees or must pay substantially more than a large business,
while getting less coverage." A spokeswoman for NFIB's Austin chapter,
which opposes much of the proposed bill, said small businesses pay an
average of 18 percent more for health care coverage than their
big-business counterparts.
Today, 62 percent of small businesses with three to 99 employees offer
health benefits, according to the Texas Association of Business.
Pay for coverage or pay a tax?
NFIB's Austin chapter and the Texas Association of Business staunchly
oppose the bill's use of employer mandates to provide health insurance.
Under H.R. 3200, a company with more than $250,000 in payroll will have
to provide insurance or face a payroll tax, starting at 2 percent for
those with payrolls of $250,000 and rising to 8 percent for companies
with payrolls exceeding $400,000. But a different version of the bill
raises the exemption threshold, requiring employers with $500,000 in
payroll or more to provide health insurance. The House will vote next
month on which exemption to include in the bill.
Bill Hammond, president of the Texas Association of Business, said a
payroll tax will be crushing to small businesses already struggling in
the down economy. "It will definitely limit new hires. Businesses large
or small can't afford these taxes," Hammond said. Laura Stromberg,
communications director for NFIB Austin, agreed, saying employer
mandates would have a "devastating ripple effect" for small business.
National NFIB analysts estimate that an employer mandate and the costs
associated with it could cost 1.6 million jobs with more than 1 million
of those jobs lost in the small business sector.
Doggett and others, however, dispute the argument that the proposed bill
would cost jobs.
Access to affordable insurance will make small employers more
competitive in the labor market, and an accessible health care system
should decrease absenteeism and increase productivity, Doggett said.
Jonathan Gruber, an economics professor at the Massachusetts Institute
of Technology, agreed that health care reform is an automatic win for
small businesses. The proposed insurance exchange would reduce premiums,
and tax credits would help many small businesses afford coverage, Gruber
said.
Also, Gruber argued, would-be entrepreneurs who feel locked into their
current jobs because they need employer-provided health insurance would
form new businesses.
Meanwhile, a study commissioned by the Small Business Majority estimated
that if health care reform is enacted, businesses with fewer than 100
employees could collectively save up to $855 billion during the next 10
years compared with what they would otherwise pay for health insurance.
The Small Business Majority is a nonprofit organization that believes
employers should provide health insurance for their workers.
Medical community unsure
Dr. Thomas McHorse, a health care provider and small business owner,
said he believes that employers should be responsible for employees'
health insurance, but that the proposed legislation is still too much of
a moving target to take a stance on the bill. "Any reasonable
businessperson would ask, 'What is the cost of this and how is it going
to get paid for?'" McHorse said. "You can't talk about increasing the
number of people who are covered and talk about reducing costs. That
doesn't follow."
The Texas Medical Association has said the proposed legislation is
troublesome. The bill falls short in areas such as Medicare financing,
health insurance reform and medical liability reform, the association
said.
Austin Business Journal - by Sandra Zaragoza ABJ Staff
Kent Hoover contributed to this report.
Reviewed / Posted by: Scott W. Yates, MD, MBA, MS, FACP
