The Small Business & Entrepreneurship Council (SBE Council) expressed frustration and disappointment today after Senate Finance Committee Chairman Max Baucus (D-MT) released his plan to reform health care.
Unfortunately, the Chairman's plan will only serve to raise health insurance costs for small businesses as proposed tax hikes and government mandates in his "mark" -- along with explosive government costs associated with overseeing changes in the health insurance market, and new compliance initiatives -- will only exacerbate current conditions. Chairman Baucus released his mark today with no Republican support.
Small business owners continue to suffer under harsh economic conditions, and unfortunately the Baucus plan will not relieve us of the high health insurance costs that plague our bottom lines and competitiveness.
Following my initial read of the bill, I found that there was little offered that would support the goal of lowering health insurance costs for small business owners. In fact, new tax hikes on health insurers could lead to higher premium costs for small businesses and the self-employed as these will be passed down to consumers. New taxes on key players in the health care industry -- such as medical device manufacturers and clinical laboratories -- will also be absorbed by consumers and harm innovation and economic growth.
The "mark" will burden small business owners and the self-employed in other ways as well, including:
-- New reporting requirements: All employers would be required to report the value of each employee's health benefit on their W-2. In addition, all employers will be required to report to the IRS payments made to corporations where this is exempted under current information reporting rules.
-- Small employers with 50 employees or more (which include employees who work 30 hours each week) that do not offer insurance will be assessed a financial penalty.
-- Self-employed individuals are required to purchase health insurance under the individual mandate, or pay an excise tax penalty.
-- A new tax is imposed on medical device manufacturers, many of which are small firms.
-- A new tax is imposed on clinical laboratories, many of which are small firms.
New rules and bureaucracy weaken portions of the bill that relate to reforms that could lead to more choice and competition for small businesses - such as buying insurance across state lines and the formation of co-ops.
The tax credits are much too limited and small firms that may actually qualify for them will require a tax specialist to help figure out their complex formula.
New taxes in the health care industry will lead to higher costs for small business owners and the self-employed -- not lower ones. In sum, the bill spends and taxes too much when our country and economy can least afford it.
Karen Kerrigan is President & CEO of the Small Business & Entrepreneurship Council