Health Insurance Reform May Hurt Small Businesses
Several organizations representing the business community have bemoaned the potential negative impacts health insurance reform could have on them. On the one hand, this isn't surprising. Chambers of commerce generally espouse laissiez-faire economic viewpoints that protect their best interests. On the other hand, small businesses in particular have been hit especially hard by soaring healthcare costs. In that regard, Congress removing some of the burden of providing health insurance plans to their employees seems appealing. However, the healthcare reform bill passed by the House of Representatives is not to their liking.
Private industry organizations have several concerns about the Democratic healthcare reform proposals. Most importantly, they believe that their bill does not fix the underlying issue: a lack of affordable health insurance. According to spokespersons, while companies would ideally provide an employer-sponsored health insurance plan, it simply costs too much. Both the House and Senate bills allow small businesses to enter a newly established health insurance exchange market, which would allow individuals and groups to form a larger pool--resulting in cheaper health insurance. Still, some chambers of commerce fear that the government's definition of a small business is arbitrary and too strict. Mid-size firms that are over the employee or payroll limit, yet not multi-million dollar international corporations with huge workforces that allow them to buy health insurance plans in bulk, could be left out in the cold.
Chambers of commerce also claim that a public option will not lead to lower health insurance premiums. Instead of increasing competition among private insurers and driving down health insurance rates as congressional Democrats claim, it could instead result in shifting more cost to employers' health insurance plans. Opponents' logic is that in order to save money, the government will under-reimburse doctors, hospitals, and other medical providers under the public option; healthcare providers' experiences with Medicare and Medicaid reimbursements are a case in point. In order to make up the lost revenue, providers will then demand higher reimbursements from private health insurance plans. They warn that some health insurance companies will drop out of the market as a result, decreasing competition and defeating the stated purpose of the government's public option.
In addition, many chambers of commerce have a philosophical objection to government interference in free markets. Businesses are worried about the employer mandate included in both healthcare reform bills, which requires businesses to either offer a health insurance plan to their employees or financially penalize them for not doing so. This is a break from what opponents claim is the historical purpose of employer-provided health insurance: a competitive advantage that allows businesses to attract the best workforce through its inclusion in compensation packages. The Senate will not force non-compliant employers to pay a fine; rather, they will have to pay a fee or tax to the federal government in order to assist the latter in subsidizing their employees' health insurance. This contrasts with the House bill, which slaps businesses with fines of up to eight percent of their payroll if they fail to provide quality health insurance and said payroll is over $500,000 annually. The different wording is largely semantics, though; either way, businesses must offer health insurance plans or pay for not doing so.
Business organizations in the United States have legitimate qualms with the current healthcare reform bill. It has the potential to force employers into providing group health insurance plans, while making it more difficult for them to do so. It serves to lessen the motivation of many businesses to offer health insurance entirely, and neglects the issues (such as medical malpractice torts) that have assisted in making health insurance so expensive in this country - causing fewer employers to offer less health insurance, and leaving more Americans uninsured like they are now. New taxes, penalties, and other costs could cut into their revenue, putting many small businesses on the brink of failure. Chambers of commerce tend to support the idea of healthcare reform in principle; clearly, the current system isn't working well for anyone. Despite that, they feel that the devil they know is better than the one they don't.
Written by Yamileth Medina
VitalOne Health Plans Direct, LLC.