KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Small Businesses Wrestle With What Health Reform Will Mean For Them

The Santa Cruz Sentinel/San Jose Mercury News: As a result of the federal health overhaul, businesses "with under 50 full-time equivalent employees will be under no obligation to offer health insurance, but those with over 50 must offer it or pay a fine. This will require counting employee hours; 30 hours is considered full time by the federal government. A tiny percentage of businesses across the nation have more than 50 employees but do not provide health insurance, about 0.2 percent, according to [the Small Business Majority, a trade group]." In Santa Cruz, the local chamber of commerce surveyed local businesses, and found only 7 percent of them had more than 50 employees (Gumz, 8/17).

Chicago Tribune/Lexington (Ky.) Herald-Leader: "To deal with soaring health costs, many small businesses have had to switch insurance carriers, push more of the financial burden on to workers, or reduce, if not eliminate, coverage. About 12 percent of nearly 500 small businesses polled in a dozen states dropped coverage for their workers in 2008 and 2009, according to a report by the Illinois Main Street Alliance. In addition, 35 percent reported switching within the past two years to insurance that covers fewer services. … Although most of the benefits under the health overhaul law, which is intended to expand health insurance to 32 million Americans, don't kick in for another four years, certain aspects of the law, including the tax credit for small businesses, take effect with the 2010 tax year. … The tax credit aims to level the playing field by helping small businesses, which tend to lack the purchasing power of larger employers, maintain coverage by pooling risk" (Japsen, 8/18).

The Orange County (Calif.) Register: But, the National Federation of Independent Business says that "[f]ewer than 2 million of the nation's 6 million companies with employees qualify" for these tax credits because of high wages paid to workers. "To qualify for the full credit, a business must have fewer than 10 employees with an average compensation of less than $25,000 and pay at least half of their health insurance premium. Companies with as many as 25 employees earning an average of $50,000 can get a partial credit, NFIB says." NFIB also says none of the 23 million self-employed will qualify either (8/17).

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