NSBA is continuing to examine the legislation to ascertain its impact on small businesses, and to identify opportunities for improvement through the remainder of the Senate legislative process. The following provides a brief overview of the Senate proposal, with a first blush reaction by NSBA:
Delivery system reforms and other efforts to reduce the cost of health care.
NSBA reaction: Cost-reducing and containment should be the number one priority of reform. More must be done to ensure that the short and long-term cost of health care is affordable for small businesses.
No employer mandates for businesses with less than 50 employees. However, if an employer with more than 50 employees does not offer credible coverage and a any worker qualifies for a federal subsidy then the employer would have to pay a penalty, with a total pay-out capped at $750 multiplied by the total number of employees.
NSBA reaction: This approach is clearly better than the approach in the House proposal; however, employer mandates in any form can be harmful to job creation and business growth, and unnecessary under appropriate health care cost-containment initiatives.
Individual mandate with a phased-in penalty for noncompliance ($750 for individuals and maximum $2,250 for families).
NSBA reaction: A strong individual mandate is a central tenet to successful health care reform. Critical to a viable individual mandate is a penalty for noncompliance. The weak mandate in the Senate proposal could serve to undermine the entire health care system and make insurance more expensive for small businesses, their employees and their families.
New public health insurance option to compete with private insurers. States could opt-out of the public plan by passing legislation. Also allows non-profit, member-owned insurance CO-Ops.
NSBA reaction: The impact that a public health insurance option would have on the private insurance market (where many small businesses gain access to insurance) is unclear; thus, NSBA has been opposed to a public health insurance option until further analysis is conducted to ascertain its impact on small businesses, their employees, and families.
Insurance market reforms, including guaranteed issue rating restrictions, as well as the elimination of preexisting condition and health status.
NSBA reaction: NSBA supports these critical insurance market reforms in combination with a strong individual mandate to carry insurance.
Establishment of a new health insurance marketplace – health insurance exchanges.
NSBA reaction: While exchanges are not the cure-all for the health insurance woes of small businesses, voluntary exchanges can serve as a tool to provide for greater ease in shopping and comparing insurance products for small businesses and their employees, particularly if they can link in with the expertise and established connections of preexisting organizations and pools.
New 40 percent tax on the value of insurance over $8,500 for individuals and $23,000 for families.
NSBA reaction: NSBA has two primary reservations with the Senate Finance Committee's proposed excise tax on high-cost insurance plans. First, it seems unavoidable that the tax will be passed down to all small businesses in the form of higher premiums. Second, it appears to be an administrative quagmire for small business owners to administer the tax.
A 0.5 percent Medicare payroll tax increases for individuals with annual incomes over $200,000 and couples over $250,000 – no change to the employer contribution.
NSBA reaction: We believe this provision is bad public policy; therefore, it should be opposed in any form, particularly because the thresholds are not indexed to inflation.
New taxes and fees on various other health care providers, including device manufactures, elective cosmetic medical procedures, and drug makers.
NSBA reaction: It is well-documented that businesses pass on cost to the end consumer. New taxes with-in the system on providers simply get passed down to small businesses, their employees, and their families in the form of higher premiums.
Small business tax credit and an expansion of Section 125 plans.
NSBA reaction: Small businesses support tax credits; however, the tax credits are neither a panacea for small businesses’ health insurance woes nor a replacement for good policies on cost-containment that make health care more affordable. NSBA supports the Section 125 plan provisions as well. By offering Section 125 plans, employers would make it easier and cheaper for their workers to purchase insurance, but there needs to be greater use and flexibility of Section 125 plans for owners themselves to participate in the plan in order to pay for their own health coverage.
Expansion of the Form 1099 filing system by requiring businesses that pay more than $600 annually to corporate providers of property and services to file an information report with each provider and with the IRS.
NSBA reaction: Small-business owners will face increased paperwork and administrative burden for each additional 1099 Form prepared. Increased costs are incurred for mailing additional forms and for hiring outside assistance to ensure that businesses are correctly complying with the law. Furthermore, if a business previously has not been required to utilize the Form 1099 filing system, greater difficulty with compliance is likely to ensue. While the proposal seeks to capture non-compliant corporations, it clearly places the burden on the wrong taxpayer—the compliant small-business.
NSBA provided the Administration with a comprehensive evaluation of the health care reform proposals earlier this week, before the Senate introduced their bill, which provide greater depth on the aforementioned concerns, as well as many other comments. NSBA has provided nearly 20 separate comments on health care reform proposals in the last six months with the goal of meeting NSBA's 2004 health care reform proposal: Small Business Health Care Reform—A Long-Term Solution for All. NSBA remains hopeful that these goals can be met before a final bill is considered by the House and Senate.
The Senate proposal has two barriers to pass at this point: the administration and the Democratic caucus. The Administration has commented that the bill meets their requirements; however, it is unclear at this point if it has the buy-in from Sen. Reid's entire caucus, which he will need to move the bill through the Senate.
Sen. Reid's office has tentatively scheduled a procedural vote on a motion to proceed on the proposal before the Thanksgiving recess, likely this Saturday. Sen. Reid has promised his colleagues sufficient time to read the bill before taking the procedural vote to end debate and begin consideration of the bill, and has assured other Senators the opportunity to offer amendments.
Assuming that vote takes place before Thanksgiving recess, it would leave 3 weeks for the Senate to debate and vote on amendments, overcome another 60-vote procedural vote, and move to final passage before they recess for Christmas and New Year holidays. Subsequently, House and Senate leaders will be tasked with reconciling the differences between the House and Senate bills for final passage and the President's approval.
The Senate proposal differs significantly from the House passage of the Affordable Health Care for America Act (H.R. 3962), which leads many prognosticators to suggest that the process is near certain to be pushed into 2010. Many Democrats wanted to avoid this timetable, given the legislation's viability is susceptible to political barriers in an election year.
Watch the NSBA Web site for calls to action or updates on the NSBA Health Reform Today Web site for more information as it is made available.
