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Health Insurance Reform - DAILY MYTHBUSTER: Impact on Small Business

Myth:  The House bill pays for health care reform with a “small business tax” that will kill jobs.

Fact: Small businesses benefit enormously from America's Affordable Health Choices Act.

  • Reform dramatically reduces small business health costs. The Small Business Majority recently released a report that showed that without reform, small businesses will pay nearly $2.4 trillion in health care costs over the next 10 years. If health insurance reform is enacted, the report found that small businesses could save as much as $855 billion over 10 years, nearly 36 percent. This money can be reinvested in the business and jobs.
  • Reform eliminates price and benefit discrimination against small businesses. A Commonwealth Fund study found the smallest firms pay an average of 18 percent more in health insurance premiums for the same benefits than larger firms. By creating a pool and offering assistance, the House health insurance reform bill will lower small business costs and increase options. Alternatively, those who would rather contribute than offer will have a discrete, predictable contribution and the knowledge that their employees will have decent affordable health care.
  • Reform can save and increase jobs. Phillip Cryan, an economist from the University of California-Berkley, estimates that the 8 percent employer responsibility requirement in H.R. 3200 would result in a net gain of 55,365 jobs, a rise in productivity, and a slowing in the rate of health inflation.
  • Most small firms are exempt; others are subject to lower rates. 76 percent of all businesses are exempt altogether from the employer responsibility requirements. An additional 7 percent of these firms would pay a graduated rate of 2 to 6 percent if they do not offer coverage. More than 72 percent of firms with payrolls of $250,000 to $500,000 and less than 250 employees already offer worker health coverage today - and will have better options under HR 3200.
  • Small business owners and their workers account for the largest share of the uninsured. An estimated 27 million of the 47 million Americans without health insurance are small business owners and their workers, according to the National Federation of Independent Business. H.R. 3200 provides market reforms and assistance to ensure coverage for small business owners and their employees.

That is why employers of all sizes are supporting the America's Affordable Health Choices Act. The Main Street Alliance, a small business group, supports the bill because it “will help make America's small business more competitive by giving them greater control over one of the most costly and unpredictable aspects of doing business: the spiraling costs of providing quality health coverage.” [7/15/09]

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