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Tuesday, November 10, 2009

Small Biz Health Care Daily: House Health Care Bill, the States and Small Business

The health care bill that passed the U.S. House of Representatives by a vote of 220-215 over the weekend would create enormous problems for consumers, small businesses and health care in general. But what about the states?

The Concord Monitor reported on November 10 that Republicans in New Hampshire argue that this federal legislation would hurt the state’s budget.

The paper reported:

• Flanked by about 15 legislative leaders, former Health and Human Services commissioner John Stephen told the press yesterday that the health care reform bill just passed by the U.S. House "will be devastating to state budgets." The bill must still pass the U.S. Senate, and Stephen urged the state's senators to vote against it.

"This will lead New Hampshire down the road of a sales or income tax," Stephen said. "These are called unfunded mandates, and we can't afford them."

• The state has about 142,500 uninsured residents. Stephen said the bill will force states to expand efforts to enroll people in Medicaid who are eligible for coverage but have chosen not to sign up. That could cost $434 million over the next 10 years. Stephen estimated the state will pay an additional $111 million over six years, beginning in 2015, to pay for expanded Medicaid coverage for healthy adults making up to 150 percent of the federal poverty limit. The bill would also restructure the "disproportionate share hospital" program, which reimburses states for charitable care, which could cost the state $157 million in 2017 and slightly more in the following years. In total, Stephen argued that the state could lose $1.2 billion under the House bill. The state would also be prohibited from reducing Medicaid eligibility or benefits.

Of course, jacking up health program costs at the state level would be more bad news for entrepreneurs, investors, small businesses and the economy, as taxes would rise in the states on top of the many and varied tax increases the House bill itself would impose on the entrepreneurial sector of our economy. As these legislative leaders noted, New Hampshire could face the imposition of sales and/or income taxes, which would diminish the state’s competitiveness, and impose serious costs on small business.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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