You needed another thing to worry about at your store like a hole in the head. Internet competition is apparently not enough. Now you have to figure out what’s going on with a possible national healthcare plan. If you don’t understand it, don’t worry. Most everyone doesn’t know a thing about the healthcare plan, and trying to figure it out is making them sick—pun intended. Hence, this story. Our goal is to tell you the facts, of course. But more importantly, we’ll tell you how it affects you as a MI store owner.
People are on both sides of the fence on this issue. We will point out some positives and negatives. But to some in the small business community, it’s much more clear-cut: they’ve said it’s akin to the movie 2012. A disaster of epic proportions.
The U.S. House of Representatives passed its version of healthcare reform, HR 3962, on Nov. 7 and, at this writing, the U.S. Senate is considering its own version, HR 3590, known as “The Patient Protection and Affordable Care Act.” While President Barack Obama had asked Congress to put legislation on his desk by the end of 2009, that deadline, as of press time, was uncertain, as are many of the questions you surely have about this bill.
Why it Matters
First, let’s tackle what you can expect if the aforementioned bill—or some variant thereof—passes.
• Employer mandates requiring employers to offer healthcare to employees, both full- and part-time. Some fear that these mandates might burden businesses with cost levels higher than profits coming in.
• Payroll tax penalty—The legislation requires that employers with a payroll of $500,000 and greater pay a payroll tax penalty of up to 8 percent if they do not provide “qualified” health insurance. Business owners say that this could necessitate wage or benefit cuts to find money to pay this penalty.
• Government-run public option: Some feel that this is a slippery slope, inviting the government to regulate businesses, such as yours, even further.
• Record-keeping and accounting costs will increase as small businesses try to document compliance.
• Legal liability might increase as businesses might be exposed to baseless lawsuits.
• Other issues, like auto-enroll mandates, possible new taxes on pass-through entities like LLCs or Subchapter S corporations, and the fear that the public option might pay below-cost reimbursement rates.
NAMM is clearly opposed to a public healthcare option, and NAMM is not alone. The National Small Business Association, the National Federation of Independent Business, and the U.S. Chamber of Commerce are also opposed to healthcare reform in its current form.
For NAMM, the impact will be profound and long-lasting: NAMM issued the following statement. “The current debate about healthcare will have a significant impact on businesses of all sizes both now and for years to come. NAMM has been working hard in Washington to oppose the (bill) and (has been) working to assure that legislation does not put extra burdens on small businesses.”
There is, however, one business association of rather nebulous pedigree, the so-called “Small Business Majority,” that makes the bold assertion that most small business owners are actually united in support of the government mandate to provide health insurance for their employees or pay a penalty. The group released a report by MIT economist Jonathan Gruber, Ph.D., that said, if enacted, healthcare reform with a government mandate would save small businesses $855 billion over 10 years.
In its report, the Small Business Majority claims that:
• “Shared responsibility will reduce the cost to small businesses of providing health insurance.”
• “Healthcare reform will save jobs.”
• “Healthcare reform will preserve wages for employees of small businesses.”
• “Healthcare reform will bolster small business profits and competitiveness.”
Overall, though, the general consensus of the small business community is that the government mandates will make it harder to remain profitable and, in some cases, even to remain in business.
Bob Graboyes, National Federation of Independent Business’ senior healthcare policy advisor, feels that the “pay-or-play” mandate is “an inefficient and unfair way” of getting the uninsured covered. “It does nothing at all to reduce costs. High costs are the reason so many people are uninsured. The mandate would do some damage, perhaps sizable damage, to firms, to the economy, and to people. And, it does nothing for those who are unemployed or self-employed.”
Another concern involves the surtax on pass-throughs. According to Mary Luehrsen, director, public affairs and government relations, NAMM: “(One of our) concerns (involves the) surtax. Seventy-five percent of small businesses are structured as pass-through entities and pay their business taxes at the individual level. More than one-third of small businesses employing 20 to 250 employees would face the tax. The tax is not indexed for inflation; the effect of the tax will creep downward, making more and more businesses vulnerable to a tax increase.”
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