What Obama’s New Health Care Plan Means for Small Businesses

The White House, in advance of a televised summit meeting aimed at reviving revive stalled health care legislation, posted last week that is meant to “bridge the differences,” in the words of Dan Pfeiffer, White House communications director, between the House and the Senate bills. The White House basically follows the Senate bill, except that in a handful of key instances it weighs in with a Solomonic compromise. “We view this as the opening bid for the health meeting” that will be televised live this Thursday, said Mr. Pfeiffer.
One of those areas is employer responsibility. Recall that in the Senate bill, any firm with more than 50 full-time employees that did not offer insurance would have to pay a $750 penalty multiplied by the number of full-time employees should even one of those employees choose to rely on a public subsidy to buy individual insurance. (The new law would require almost everyone to buy insurance.)
The White House compromise both softens and sharpens that blow. On the one hand, it carves out a 30-employee deduction on the penalty, so that a firm with 51 full-time workers, for instance, would multiply the penalty by only 21. On the other hand, it raises the penalty from $750 to $2,000. Under the White House amendment, a 51-employee firm would pay only $3,750 more than it would under the Senate bill. But a firm with 100 employees would pay $65,000 more.
“One of the issues during the Senate debate raised by the Congressional Budget Office and their scoring of this was that you needed to make this strong enough that employers would have an incentive to participate and provide health insurance coverage,” said Nancy-Ann DeParle, director of the White House Office of Health Reform. “And in testing it, that number of $2,000 was one that made it stronger and helped us get more employer-sponsored coverage.”
The president would also eliminate the Senate bill’s much lower employee threshold for construction firms (five workers instead of 50). In addition, the Senate bill prohibits firms that offer coverage from making new hires wait more than 90 days for their insurance to take effect and assesses companies a fee if the waiting period is more than 30 days but less than 90 days. The president would keep the prohibition, but eliminate the assessment.
Is it necessary to spend this much on health care or can we use that money in different areas of the economy? How does this affects business owners? Should health care be tied to employment? How will this impact our economy?