We learned something new watching Republican John McCain and Democrat Barack Obama in the debate Tuesday evening. When I heard Senator Obama proclaim that there was no employer mandate for small businesses in his health care plan, my radar certainly went off. After all, SBE Council has carefully read and followed both candidates' plans on a range of issues impacting small business. And, we regularly update those positions on our popular "Where the Candidates' Stand on Key Small Business Issues" grid at www.sbecouncil.org. The Obama health care plan certainly included a mandate on all businesses, a "play or pay" style scheme.
Naturally, I went right to the Obama for President website and re-read his plan. Now, included in that proposal, is an exemption for "some small businesses" with respect to the "play or pay" component. Certainly, this is an interesting development, but it would be nice to know what type or size businesses will be exempt from the mandate.
As far as I can tell (and I have scoured his plans thoroughly and regularly), the "exemption" has to be a relatively new addition. In a Q&A feature on the campaign website highlighting the Obama health care plan, it reads: "Employers who do not offer meaningful coverage to their employees will have to contribute a percentage of their payroll to help offset the cost of providing coverage to all Americans." It adds, "Some small employers will be exempt from this requirement."
Again, it would be useful to know what types or sizes of small businesses will be exempt from the payroll tax penalty if they do not provide health coverage.
In addition, how small firms can qualify for the tax credit still requires more information. After all, there are strings attached to the refundable tax credit, which is a central feature of the Obama plan.
In order to qualify for the refundable tax credit of up to 50 percent on premiums paid "small businesses will have to offer a quality health plan to all of their employees and cover a meaningful share of the cost of employee health premiums," according to the plan.
What is the definition of a "quality health plan," and how much is a "meaningful share" of costs that employers must cover in order to qualify for the tax credit?
Of course, for most small businesses, high costs remain an issue. If, by definition, a quality plan means expensive gold-plated coverage, the tax credit may not help all that much.
Such details will allow entrepreneurs to conduct their own cost-benefit analysis of whether the Obama plan is a health care plan that produces the type of "change they can believe in," or one that merely imposes more costs -- the ladder scenerio is most definitely a continuation of the status quo.
Karen Kerrigan
President & CEO
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