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Friday, April 2, 2010

Small Businesses React to the Health Care Reform Bill


Posted: 2010-04-01 17:50:20

Now that the Health Care Reform Act has officially passed, small businesses -- whether in support of the health care reform bill or against it -- are processing what the future will hold. Many small businesses still feel discombobulated by the very complicated details of the new, tide-changing health care reform.

In 2014, organizations that have 50 or more employees and do not provide affordable health coverage to employees could face penalties of up to $2,000 per full-time employee. The health care reform offers some good news for smaller businesses with fewer than 25 employees and average annual salaries equaling less than $50,000 per worker: They will not face penalties and even receive tax credits for offering health insurance, which could help them provide potentially attractive benefits packages to their staff without breaking their budgets.

Despite the suggested benefits of the health care plan, entrepreneurs and small business owners across industries have expressed concern and confusion about its real impact, and which waves they will actually feel from now until 2014. They have a lot of questions about whether or not the new plan will negatively affect their companies, and some worry it will not actually be legitimately affordable or provide care that suits their specific needs. They are also concerned about how such radical structural change may alter the quality of the overall health care system in the U.S.

The following 7 small business owners weighed in on how they see the Health Care Reform Act affecting the U.S., their businesses, and their families in the future.

Brian C. Greenberg, CPA, Brian C. Greenberg & Assoc., Marlton, New Jersey

"It is a mistake to think the health care bill will only affect individuals making over $250,000 annually. In fact, all working people, particularly those who are employed by companies with greater than 50 employees will be severely affected. If they have single coverage, they will be contributing $4,000 a year, and if they have family coverage, they will contribute nearly $11,000. This is a non-deductible 40% excise tax that hits in 2018 that employers must pay. Of course, these funds will come from future pay increases, wage cuts and/or layoffs. However, the most likely scenario is that many companies will opt for the penalty and drop health insurance for their employees, causing massive migration of Americans to seek government insurance.

"Additionally, the 40% excise tax amount is assessed on insurance companies if their premiums exceed $10,200 for individuals and $27,500 for family coverage. It is indexed at a 2% increase in subsequent years. Thus, if insurance companies are prevented from passing on costs in the form of higher premiums, then their only other option will be to drive coverage to the least costly area. The family doctor will have been long gone, replaced by under-staffed, over-utilized clinics where waits for elective procedures will be months and years rather than days and weeks. Physicians already discouraged by the high cost of education will continue to suffer a decline of new professionals exacerbating the delivery of timely and quality medical services."

Ivor Irwin, Freelance Writer, Chicago

"I am very lucky that my wife's job covers the family well, especially since I got my chest cracked 12 years ago. It's very hard for single freelancers out there especially. As customers grow used to the idea that they've 'got us' and can use the lure of 'maybe I'll need a full-time part-timer soon,' I expect wages to plummet in the freelance writing market, not improve. A lot of self-employed writers will be living along the margins in a kind of Raskolnikov-esque existence. The monolithic power of the insurance companies will surely be felt by us all once they flex their muscles and raise rates.

"A good thing that can come out of this is that insurance companies will surely be no longer able to 'cap' their spending. I grew up in a socialist England. Free medical care and dentistry is a right, but not if you have to wait 12 hours in a queue (which is normal) and if the doctors and nurses have a kind of sarcastic contempt for the public. Seeing a specialist in Blighty means, literally, making an appointment months in advance. When my dad got lymph node cancer as a part of the swath of illnesses that swept across Europe after Chernobyl, he became one of those statistics we write about, waiting for months to see a specialist. I witnessed the English system killing him, because most of the workers were ill-trained, apathetic, inexperienced and overwhelmed by the vast number of patients. All of the good medical people in England head here as fast as they can, of course. Consequently, I fear this will become the rule, rather than the exception over here, too.

"Additionally, if states have to account for every penny and govern responsibly, I wonder what will happen from now on to illegal immigrants?"

Janie Peterson, e-video Executive Producer, Peterson Productions Live, Minneapolis

"I'll be allowed to stay in business on my own, thanks to the Reform Act. Insurance premiums were rising so much, I could not justify the expense for my small business. With three kids and a husband, the monthly premiums were far too high with very little reward. If my husband or I were to get sick, we couldn't keep up the payments anyway. So what good did it do us? We were trying to do the right thing and buy into a plan, but rising costs were causing me to think about another corporate job with health benefits.

"I'm thrilled to have health care reform in place, so we can continue building our small business and see our kids through elementary school and beyond. We used to have media jobs and hated seeing so many of our friends laid off in recent years. At the same time, we're happy we made the switch to open our own e-video shop and feel ahead of our peers professionally. Now we can really make our kids a priority at the same time."

Rick Goetz, Music Consultant, New York City

"I'm not saying the system doesn't need reform, but what concerns me is that there are so many moving parts that no one can tell me how this will impact me or my business. It makes me wonder if those in the positions of power even know for sure, because it is not as if I haven't spent a considerable amount of time trying to understand.

"I have been shopping for a new insurance plan for the last several months, and some of the existing low-cost plans seem like they are not worth having at all. I am hopeful that this health care plan will provide good coverage for everyone, but I must admit to being a bit worried about the idea of having to pay for a plan that might not be worth the money. I personally don't care about the 'socialist' aspects that seem to worry some people but am more concerned that I might get stuck with a mandatory product that isn't worth its weight. I just hope, whatever may come, that getting medical care is a more enjoyable experience than dealing with other government run institutions -- like the DMV."

Kathryn Korostoff, Founder and President, Research Rockstar, Westborough, Massachusetts

"I owned a small business for 15 years and always provided health care. Yes, it was expensive. But I considered it just another cost of doing business. Some employees were on spouses' plans, so that saved me some money. I paid 50% of the premium per employee, and everyone seemed to find it acceptable. The plan was quite good, but I did not offer dental because that was too expensive.

"I sold that company and just recently started a new one, so the potential costs do not yet relate to me. But I can't imagine having employees without offering them basic health care.

"Compared to all the other costs of running a business -- rent, equipment, legal fees, business insurance, salaries, etc. -- I have never considered health care to be something that would 'break' my business."

Dr. Tom Potisk, Holistic Physician and Author, Caledonia, WI

"I'm truly happy that those who were unable to access health care previously will now be able to do so. But I'm concerned that many people assume their health care is a doctor's or an insurance company's responsibility. Statistics truly show that we need additional self care more than we need additional health care. Poor eating habits, lack of physical activity, and even improper posture are examples where self care and doing things differently would result in better long-term health. The reform contains benefits like no co-payment for some tests, but it's important to remember that all those tests are really early detection, not real prevention."

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