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Speaking out on health care


By Sarah E. Needleman

What does the health-care bill mean for small business? The answer may depend on who you ask.

We talked to members of two national organizations with opposing views on the legislation: James Gelfand, senior manager of health policy for the U.S. Chamber of Commerce, and David Borris, a member of the national executive committee of Main Street Alliance.

The Chamber of Commerce was established in 1912 and today has more than three million members, more than 96% of which are businesses with 100 employees or fewer.

Main Street Alliance, founded in 2008, is a network of state-based small-business coalitions focused on health care that has roughly 10,000 members combined.

The Wall Street Journal: What's your overall stance on the health bill as it pertains to small business?

Mr. Borris: Without significant health-care reform, a tremendous number of small-business owners who currently offer health insurance to their employees would no longer be able to do so within the next two to four years. There is one downside to the bill—it doesn't have a public option. But it's a start.

Mr. Gelfand: There are some pieces of the health bill which will be helpful for small businesses, however these benefits will be far outweighed by the negatives. The bill fails to bend the cost curve. It's expanded coverage at the expense of the nation's pocketbook and down the road we will all have to pay.

What will the bill mean for the smallest of small businesses?

Mr. Borris: They are going to be eligible for tax credits up to 35% of their contribution to health care for their employees over the next three years and up to 50% when the exchanges go into effect in 2014. That's important because small businesses, especially start-ups, have a difficult time competing for top talent. The second or third question prospective employees always ask in a job interview is: What does the health-care package look like? When you're forced to say, 'I'm sorry but we don't offer a health-care package,' the top talent goes to an interview the next day for a Fortune 500 company. They've got to provide for their spouse and children.

Mr. Gelfand: Only businesses with fewer than 25 employees that have an average annual salary between $25,000 and $50,000 will receive a tax credit starting this year. So we've already ruled out most of the country's small businesses because they are not eligible. And for those that are eligible, many won't want to use this credit. Two years after the exchange is enacted in 2014, the credits disappear. There's no transition, they just go off a cliff and so suddenly a business is having to pay twice as much as they paid the year before in health insurance.

What will the bill mean for businesses with more than 50 employees?

Mr. Borris: Ninety-six percent of businesses in the U.S. have less than 50 employees. Of those businesses with more than 50 employees, over 95% already offer health-insurance coverage to their employees. The people who currently opt out of the system are about 4%, or less than one-sixth of one percent of all businesses. And in a very real way, those of us who do offer coverage to our employees are actually subsidizing those businesses whose workers aren't in the system because they aren't going without care when they get seriously ill. They just go for care on the backs of taxpayers, resulting in an additional subsidy from the American public.

Mr. Gelfand: If they offer no health insurance, they will pay a flat fee based on the number of employees they have. However, if they choose to offer health insurance, that insurance must meet government standards and even then they could end up being fined just as much as if they offered no insurance. Under the new mandate, if an employee's contribution toward his health-insurance premium exceeds 9.8% of his salary, he's eligible for an exchange credit. For every employee that receives an exchange credit, a business is fined $3,000. So basically you could be in a situation where you're offering health insurance to low-income, low-skilled employees that might not protect you from paying the full employer mandate fee.