The health care plan proposed by House Democrats on July 15 would punish small business owners who are already struggling under harsh economic conditions. It will do little to make health insurance more affordable. The content of the bill -- called “America’s Affordable Health Choices Act" -- is not truthfully represented by its title. The $1 trillion-plus plan will accelerate job loss and business closures as the employer mandates and excessive taxes and penalties make it financially unfeasible for many firms to compete.
It’s seems rather extraordinary that House Democrats are moving forward with this scheme. Either they are dreadfully out-of-touch, or just plain contemptuous of small business owners. Many small businesses are struggling to access and keep health insurance on top of juggling other financial pressures. Imposing taxes and a costly mandate, as the Democrat plan proposes, during a period when businesses are already cutting jobs and investment is economically foolish.
The 1,000-plus page Democrat plan includes:
• Employer Mandates: Requires employers to provide insurance or pay a penalty for not doing so. Businesses with more than $500,000 in revenues would pay a penalty of 8% of payroll. There is a graduated penalty for firms falling between $250,000 to $500,000 in revenues with business with less than $250,000 exempt from the mandate. (The graduated rates are 2% of payroll for employers with payrolls above $250,000 to $300,000; 4% for employers with payrolls above $300,000 to $350,000; and 6% for employers with payrolls above $350,000 to $400,000.)
• An individual Mandate: Individuals and the self-employed are required to buy health insurance or pay a financial penalty, which would be 2.5 percent of income.
• Higher Taxes: A surtax would be imposed on higher-income individuals – many of which are small business owners. Individuals earning $280,000 and couples earning $350,000 would get hit with a 1% tax; those making $500,000-$1,000,000 would be taxed 1.5%; and couples earning more than $1 million would pay a 5.4% tax. These tax rates would increase if certain targets are not met.
• Government Health Insurance: A government-run health care plan is established. Such an option would undermine private insurance, diminish choice in the marketplace and ultimately drive insurance rates higher. Small businesses and individuals could be taxed more to keep up with the higher costs associated with non-competitive, government-run health care.
As large, complex and costly as the bill appears, House Democrats plan to begin markup in the Education and Labor Committee as early as July 15. The House Ways and Means Committee plans to begin markup on July 16. House Democrat leaders say they want a bill passed before the August recess and the legislative process will move rapidly.
The rush to pass this bill without allowing a full examination of it consequences is negligent. The economic consequences of this legislation are significant, including its impact on the small business sector and the future of U.S. entrepreneurship. Small business owners certainly want action on reforms that bring them affordable health coverage, but putting the cost burden for financing this government-run system almost exclusively on their backs is unjust.
Karen Kerrigan
President & CEO
1 comment:
You make some good points, Karen. However, even if businesses, including small businesses, have to bear more of the up-front costs of this type of proposal, isn't it worth it when it comes to preventative care and and the lower, long-term costs of health coverage? I also think that, if employees are feeling better as a result of more emphasis on preventative care, they'll take less fewer scheduled and unscheduled absences, leading to greater productivity. Another point I would make is that taxpayers as a whole would likely be better off in the long run, as greater insurance coverage would mean fewer ER visits whose payments are covered by them now. This could help revive our economy.
What are your thoughts on these points?
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