Bloomberg Businessweek Op-ed
With news that opponents of the new health-care law are actively trying to repeal the landmark legislation, small business owners have great reason to be concerned. Lawmakers and pundits in support of this move claim the Patient Protection and Affordable Care Act (PPACA) hurts small businesses and our economic recovery, as evidenced in Scott Shane's Jan. 7 column "Small Business Isn't Celebrating Health-Care Reform." The facts say otherwise. While political rhetoric attacking health care reform may get headlines, it does nothing to lower the cost of health insurance for America's 28 million small businesses.
Shane focuses his critique of health-care reform on the impact of the small business tax credits—a key component of the law that took effect in 2010—and even implies that the effect has been negative. Nothing could be further from the truth. In fact, many insurers saw a dramatic increase in small group plan enrollments in 2010. America's largest health insurance company, UnitedHealth Group (UNH), enrolled 75,000 new small business employees; Coventry Health Care (CVH) added 115,000 enrollees; and Blue Cross Blue Shield of Kansas City attributes its 58 percent increase in small business coverage specifically to the tax credits, noting that 38 percent of the new business came from companies that had not previously offered insurance.
The health-care law helps small business owners provide benefits by offering them tax credits for up to 35 percent of their health insurance costs (rising to 50 percent, beginning in 2014). A report we released last year with Families USA, a nonprofit consumer health-care advocate, found nearly 84 percent of small employers nationwide (more than four million companies) eligible for the tax credit on 2010 tax returns if the employers choose to offer coverage. No matter how you look at these numbers, it's clear that the value of these credits isn't "low" and that it's incorrect to say "few" small business will be eligible.
Informed Businesses Favor the Credits
Moreover, our research indicates that small business owners believe this particular provision of the health care law will help them keep or begin offering coverage. Opinion polling of 619 small business owners nationwide that we released on Jan. 4 showed that one-third of small employers that currently don't provide insurance would be more likely to do so because of the tax credits. Our poll found that 31 percent of small business owners already offering health insurance believe the tax credits make it more likely that they will continue providing benefits in the future—including 40 percent of those with three to nine employees. In fact, the biggest barrier that might keep small businesses from benefiting from this provision is ignorance that it exists. We found that 56 percent of small business owners are unaware of the tax credits. Misinformation about these credits from Shane and others doesn't help small employers take full advantage of the new law to save real money now. That money can be used to create jobs.
One point conspicuously absent from Shane's column is any mention of what would happen if we maintain the pre-reform status quo. A study based on research by MIT economist Jonathan Gruber and released by our organization in 2009 found that without reform, employers would pay nearly $2.4 trillion in health-care costs for their workers over the next decade, cutting 178,000 small business jobs and $51.2 billion in profits. Gruber's research projected a significant savings if multiple variations of the type of reforms then pending in Congress were enacted.
In 2014, State Insurance Exchanges
Critics continue to cite the misguided assumption that the Affordable Care Act will result in higher costs, fewer jobs, and a reduction in economic growth. These outcomes already exist in our current, broken health-care system. The truth is that many provisions of the new law, such as small business tax credits and insurance exchanges, will help lower health-care costs for small businesses, allowing them to grow and once again play their essential role as the nation's job generators. When they go into effect in 2014, state health insurance exchanges will be authorized to negotiate prices with insurers, extending to small businesses some of the buying power large companies currently enjoy when shopping for coverage. The exchanges—competitive marketplaces to buy and sell private health insurance—will enable small businesses to access lower-cost health care without sacrificing quality.
The health-care law is indeed complicated. Unfortunately there's been more heat than light shed since it was enacted. Small businesses don't need to witness more bickering over health-care reform; they need to know now how provisions in the new law can help boost their bottom lines. Our country's job creators need all of us to focus on the hard work of implementing the law and getting them relief from ever-rising health-care costs—not more political squabbling, unfounded speculation, and overheated rhetoric.
John Arensmeyer is founder and chief executive officer of Small Business Majority, a national small business advocacy organization founded and run by small business owners.