The Senate Health Bill: Bad for Small Business

John Ligon / November 19, 2009

The Reid health bill (H.R. 3590) leaves small businesses, and particularly small business owners, largely out of the picture. Small businesses, and particularly small businesses that currently do not offer health insurance coverage, will not get much break from this bill. Reid’s bill outlines a “small business tax credit”, which only lasts for two years and largely excludes small business owners, small businesses with high-average payrolls, and firms with 25 or more workers. After all exclusions, essentially the only eligible firms are those firms with 10 or fewer workers as well as those with low-income workers—the least likely to offer coverage even with a significant price reduction.

Reid’s bill, even with these “cost-reducing” tax credits, will not address the many uncertainties small businesses face in deciding whether to offer health insurance coverage to its workers. Small businesses—and particularly small business owners—most often find it difficult to predict year-to-year profits as well as health insurance costs. This is compounded for many small businesses with the fear of having to withdraw coverage in future years. Moreover, most small businesses will not find it worthwhile to begin offering even with the credits. In 2007, only 2.5 percent of total small employers in Maine actually purchased health insurance coverage through the “public option” offered through the state health insurance exchange, even with full knowledge of the program and its “benefits”. (more…)