GUEST EDITORIAL: Affordable Health Insurance for Small Business

When you hear all the scare mongering in the health care debate, just remember that national health insurance reform is absolutely essential to small businesses. Less than 40 percent of our state’s small businesses with fewer than 50 employees can afford to offer health insurance, and more small businesses are dropping coverage every day.

This is why the South Carolina Small Business Chamber of Commerce thanks Congressman John Spratt for voting to pass the House health insurance reform bill and moving the process onto the Senate.

The House reform legislation has numerous provisions that would help make health insurance more affordable for small businesses.

1. Under the House bill about 20 percent of lower income workers in South Carolina would be covered by Medicaid. If an employee’s family income is below 150 percent of the federal poverty level ($33,100 for a family of four), that employee would get health insurance directly from the Federal and state government not from the employer.

Small businesses usually only have a certain amount of money they can put into employee benefits. If several employees are able to get their health insurance through Medicaid, the employer can now afford to offer health insurance to the remaining workers.

2. Everybody understands that small businesses pay more for health insurance (up to 18 percent more) compared to big businesses simply because of their size. The House bill would break down state boundaries and create a giant national pool of individuals and employees of small businesses to leverage their large numbers to get lower insurance premiums. This insurance exchange would allow people to easily pick from the insurance companies seeking their business.

The House bill would also create within the insurance exchange a health insurance plan backed by the federal government. This public option plan would be similar to any private plan in that no one would be forced to buy it, it would not provide free insurance, it would negotiate rates with health care providers, and it would have to stand on its own without government subsidy. But because it would not have a profit motive or give exorbitant benefits to executives, premiums might be more affordable and thus provide real competition to the private health insurance market.

3. The House bill would provide tax credits for businesses with up to 25 employees to encourage them to offer health insurance by making it more affordable.

4. The “hidden health tax” ($1,017 a year for family coverage) in every premium today to pay for uncompensated care for the uninsured would be greatly reduced when most U.S. citizens have health insurance under the House bill.

5. Most small businesses know that under today’s system having one employee with a pre-existing condition or simply being much older can cause health insurance premiums to rise dramatically. Under the House bill, insurance companies would no longer be able to use pre-existing conditions to hike premiums and age rating would be drastically reduced.

The House bill would make health insurance more affordable for small businesses in all the above ways without adding to the national debt according to the non-partisan Congressional Budget Office.

The House bill would also not increase taxes on small businesses and the middle class. The bill calls for families reporting adjusted gross incomes of over $1 million to pay an income tax surcharge on income above that threshold. These are not middle class families, and they are not owner-operated small business people.

While the Small Business Chamber supports the House bill, we will encourage the Senate to eliminate the business mandate to offer health insurance, which under the House bill would require businesses with annual payrolls above $500,000 to offer health insurance (85 percent of our state’s businesses would not fall under this mandate). At this time, a Senate bill has been offered that exempts businesses with 50 or fewer employees from a mandate to provide health insurance (over 95 percent of our state’s small businesses).

While we don’t know what the final health insurance reform legislation will look like, the House bill is a good start at helping our state’s small businesses.