A recent statement from the Senate Finance committee outlined how small business health insurance exchanges, tax credits, and grants for workplace wellness as part of health reform would all make quality coverage more available and affordable for small businesses. In this guest post, San Diego small business owner Vince Mudd explains why he -- and the workers he insures -- can't wait. Mudd is CEO of San Diego Office Interiors, a design-build interiors company and the president of International Realty and Development.
Through his involvement in the regional Chamber of Commerce, the San Diego Regional Economic Development Corporation, Campanile Foundation at San Diego State University, and State Compensation Insurance Fund, he has worked to ensure that health related issues -- and their impacts on small business -- are understood by policy makers, business people and the public.
Many politicians and pundits claim that efforts to reform our health system are moving too quickly. Yet for millions of small business owners like me, health reform cannot happen soon enough.
In a The Washington Post op-ed today, Health and Human Services Secretary Kathleen Sebelius reminded us why we're talking about health reform in the first place -- because Americans want peace of mind.
Health care is not supposed to be a guessing game. Americans who have coverage should not have to wonder -- am I going to be dropped from my plan if I get sick? What happens if I lose my job? No one should be one illness away from bankruptcy. No one should have to choose between food and shelter and medicine for themselves or their children.
The HHS Secretary says that in the current system, health insurance companies have all the power. They can deny coverage for pre-existing conditions, cherry-pick who gets covered, offer bare bones coverage plans, or charge sky-high premiums. For Sebelius, peace of mind means putting power and choice back in the hands of consumers. In a system that promotes health care coverage choice, "insurance companies... will know that if they don't deliver a great value, their customers will flee."
For small businesses the economic hits just keep coming, and as the New York Times reminds us, the hardest hits are often from health care.
The Times' Kevin Sack profiles several small business owners faced with a difficult choice: cut health care benefits or close their doors. Amberly Allen, who runs her own direct-mail firm, spends 17 percent of her firm's payroll on employee health benefits. Thomas L. Fritts, who owns a sporting goods store in Illinois, saw his company's health care costs rise 30 percent last year while his business's sales plummeted 60 percent.
Small business owners are shifting a greater share of health care costs onto their employees. In the past two years, for businesses with fewer than 200 workers, the percentage of employees enrolled in a plan with an annual deductible of $1,000 or more jumped from 16 percent in 2006 to 35 percent in 2008. See the chart below from the 2008 Kaiser HRET survey:
For the health care cognoscenti, the most puzzling moment of last night's debate was probably when John McCain said, "The average cost of a health care insurance plan in America today is $5,800."
Where'd he get that? The figure most commonly cited—and we've heard it before on the campaign trail this year—is $12,680 for a family plan. That comes from a Kaiser Family Foundation survey. That $5,000 tax credit McCain promises doesn't go quite as far in paying for a $12,000 plan.
For a minute we wondered if McCain had just misspoken, that he was confusing the cost of a family plan with the cost of covering an individual (about $4,700, according to the same Kaiser data). Or maybe he was time-traveling (family coverage cost about $5,800 a decade ago).
Turns out it's not just Barack Obama and liberal Democrats finding fault with John McCain's health care proposals. According to today's New York Times, rather than thinking John McCain's health care proposals are cool, business is rather cool toward John McCain's health care plan.
Big Business and Small Business alike told the NYT's Kevin Sack that McCain's plan would accelerate the erosion of employer-sponsored health insurance that still covers 62 percent of Americans under age 65. They didn't think it would do much to cover the uninsured, and they were skeptical of his contention that his approach would stimulate competition and bring down cost. To the contrary, groups like the Chamber of Commerce said they thought that the way McCain has structured his free market approach that emphasizes families using tax credits to help pay for coverage through the individual market would be very hard on small businesses and old-line manufacturers.
The director of New America's Health Policy Program, Len Nichols, testified today before the House Committee on Small Business at a hearing on "Making Health Care Reform Work for Small Business." We'll post his full written testimony soon. You can see Len's testimony below, and watch highlights from the rest of the hearing here.
Len praised Chairwoman Nydia Velázquez and her co-sponsors on the CHOICE Act, as well the co-sponsors of the SHOP Act, for taking a bipartisan approach to health reform for small business and proving we can do better than the partisanship of the ‘93–‘94 efforts.
Alabama 's Republican Gov. Bob Riley has signed a law that will expand the tax deductions small businesses can take for employee health care costs. Supporters say the goal is to keep people covered—and take enough strain off small businesses that they can create more jobs.
The measure, described in the Alabama Press-Register, would allow owners of businesses with 25 or fewer employees to deduct from their state income taxes 150 percent of their costs for employee health insurance premiums, up from 100 percent. Additionally, small business workers who make $50,000 or less annually can deduct 150 percent of their health insurance costs.
Riley said the new law will encourage firms to hire more workers, which will help the state's overall economy. Alabama has about a 15 percent uninsured rate, just below the national 16 percent rate.
The state seems to have put the uninsured on its radar screen. Earlier this spring, we wrote about a public-private sector initiative to cover all 5,000 uninsured kids in the city of Birmingham.
On April 10, 2008, the House Small Business Committee held a hearing - “Modernizing the Tax Code: Updating the Internal Revenue Code to Help Small Businesses Stimulate the Economy." The Committee also issued its own report - “Seven Ways to Stimulate the Economy by Updating the Internal Revenue Code." In addition to having witness testimony online in written form, the Committee has videos on YouTube about the hearing. This can all be accessed at this summary of the hearing.
I think the ideas presented by witnesses and in the Committee's report fall into two categories:
- Tweaks to the federal tax law to make compliance and doing business easier for small businesses.
- Changes that reflect the fact that most of the federal tax law was written before we entered our global, interconnected, knowledge-based economy and society and thus is in need of modernization.
Examples of Category 1 suggestions:
We've known for years that small companies face a struggle to offer health care to their workers, or pass on more of the costs to the employees. But, with health costs increasing every year, these struggles are even more pronounced. More bad news; the plans they offer are also of a slightly lower quality, Jane Sarasohn-Kahn at Health Populi tells us.
Small companies don't have the bargaining clout of a huge corporation, and with fewer workers, they can't spread the risk as well. Federal legislation to allow them to band together has been stuck for years, victim in part of deep disagreement about the role states should have in regulating insurers or requiring specific benefits. But a new study from the Kauffman-RAND Institute for Entrepreneurship Public Policy (KRI) sheds light on coverage trends among big and small firms between 2000 and 2005.
Left, right and center know that more than 80 percent of small businesses owners say finding affordable health care is a challenge. But lawmakers have been stalemated for years about a solution. Four senators took a bipartisan step forward today offering a bill called SHOP - the Small Business Health Options Program.
Senators Richard Durbin (D-Il), Olympia Snowe (R-ME), Blanche Lincoln (D-AR), and Norm Coleman (R-MN) introduced the latest policy proposal designed to increase access to affordable, quality health insurance for small businesses. Just 59 percent of small businesses offered any health coverage to their workers in 2007, and fewer than half of very small businesses (9 workers or less) did.
Under the Small Business Health Options Program or SHOP: