Health Care Reform-- Will Small Businesses Suffer?

According to a study conducted by the Council of Economic Advisers (CEA), in 2008, 49% of businesses with 3-9 employees offered healthcare, which is a decline of almost 10% from 58% in 2002.

Contrarily, 99% of businesses with 200 workers or more offered health insurance. It seems that the smaller the business, the less likelihood employees will have access to affordable insurance.

This means many hard working American citizens are not covered by healthcare insurance—45.7 million to be exact. It seems we have an insurance crisis comparable to our unemployment woes.

But is health care reform the right choice, and how will it affect you and your small business?

What is the point of Health Care Reform?

The point of health care reform is to expand coverage and provide it at lower costs. Insurance rates continuously get higher, and more people go without insurance. The Obama Administration’s plan is to regulate our health care costs while providing its services to as many as possible.

The new insurance plan will be made affordable by providing the largest middle class tax cut in health care history. The plan also seeks to end discrimination due to pre-existing conditions.

This plan extends to small businesses and larger establishments alike. The proposal has been received with mixed feelings from the public, and some wonder whether or not the negative effects of this plan will be worth it.

Why Isn’t The Current System Working?

When it comes to healthcare coverage on employees, small businesses are often either forced to eliminate the option or offer less pay for benefits. A small business on average pays 18% more per employee than a larger business (over 20 employees) due to high broker fees, fixed administrative costs, and adverse selection.

What Are the Benefits?

The government is offering to allow businesses what they call an “insurance exchange,” meaning they would get to choose from a variety of health care plans similar to going through an insurance agency. However, these plans would be offered at cheaper costs to the employer and employee.

When employees do not have health insurance, they may not be able to afford the medical treatment they need. This could cause even more absence from work, and reduced productivity. In short, employees need health care insurance to ensure that they remain employees. This can be helpful in creating a job market like never before. In our present economy many workers refuse to leave their jobs due to fear that they will not be able to afford health care. If every business were to offer insurance, American citizen would feel free to branch out into different job choices, which once again increases productivity and ingenuity by offering an opportunity for creativity and change without fear of financial ruin.

The goal the government is trying to accomplish? Small businesses do not have the same advantages and access to healthcare as larger businesses do, and simply, it’s not fair. Small businesses and employees should be allowed the same affordable healthcare. After all, doesn’t a check-up with the doctor cost the same whether you work for a small business or large business?

What Are the Negative Aspects?

Dawn Sweeney, National Restaurant Association President and CEO states, “The changes included in the modified version of the bill would severely and negatively impact restaurants by weakening the small business exemption, increasing penalties on employers, and imposing onerous administrative burdens on the industry.”

This means industry administrative leaders (managers, business owners, i.e.) will have additional paperwork and procedures to ensure each employee’s healthcare needs are met.

In addition, any business that does not provide insurance for employees will be subject to fines. A company with less than $250,000 on their payroll annually will not be charged such fines. This protects smaller businesses, while strongly persuading employers with a “pay or play” policy regarding insurance plans for employees.

Marty Horn, Owner of a Pal’s fast food restaurant, claims, “Every projection I’ve seen in this legislation shows that my costs are going to go up.” This all depends on your current plan, and what your plan will be once the bill is put into action. If you haven’t ever offered healthcare to employees, costs will go up.

How Can I Make My Opinion Heard?

In my research, I have come across many diverse opinions on the health care reform plan. While all policies meant to blanket the mass majority have positives and negatives, insurance is nonetheless a leading issue in our country that needs to be addressed. Whatever opinion you have, you can become involved in the decision. Do your own research, become informed, and inform your peers. To directly reach the people in charge, give the White House a call at 202-456-1111 and read The Economic Effects of Health Care Reform On Small Businesses and Their Employees on the White House's official website.