The National Federation of Independent Business raised some important concerns about the health reform bill in the House during a conference call with reporters today.
The group opposes any mandate for employers to provide health insurance. Under the House bill, any company with more than $250,000 in payroll will have to provide insurance (72.5% of individual premiums and 65% of family plans) or face a payroll tax, starting at 2% and rising to 8% for companies with more than $400,000. (Details of each plan here.) The NFIB says this will hurt hiring as companies have to take on these “play-or-pay” costs. A payroll tax, unlike an income tax, hits businesses whether they’re profitable or taking losses. Bill Rys, NFIB’s tax counsel, said the payroll tax sends the message that “we want you to limit jobs, and that what this tax will do.” (The Congressional Budget Office looked broadly at the effects of health care reform on hiring here.)
Another issue, raised by NFIB lobbyist Michelle Dimarob, is what kind of plan will constitute adequate coverage for small businesses to avoid paying the penalty. Some companies that already cover their workers with no-frills plans or don’t pay for family coverage might face the penalty anyway. Does that create an incentive to upgrade to a bigger plan, or drop coverage entirely? It’s not clear how widespread this issue would be.
Dimarob also raised questions about the insurance exchange, the mechanism by which individuals and employers would be able to shop for health plans. The NFIB supports the exchange idea, but in the House bill, only firms with 20 or fewer employees can shop through the exchange, but the “small group” insurance market covers firms with up to 50 workers. So companies in that 21-50 employee range face the mandate to provide coverage without access to the exchange.
“What small business is looking for is a guarantee that they’re going to have access to that exchange,” Dimarob says.
It’s also worth noting the political shift. Early on, the NFIB and other stakeholders took firm stands in favor of health reform, and the common mantra was to “avoid letting the perfect become the enemy of the good.” In recent months, the White House has gotten concessions from other interest groups like the insurance industry, hospital groups, and pharma companies on cost savings. But the NFIB, which was instrumental in blocking health reform in 1994, is walking a fine line between opposing this bill while still advocating for reform.
“At the end of the day, NFIB and small business owners want health care reform that is going to make things better than the status quo. If it’s going to make it worse than the status quo, we’re not going to support it,” says Dimarob. “This bill is going to make it worse than the status quo.” A more business-friendly bill may emerge from the Senate Finance Committee, though it may not happen until after lawmakers take their August vacations.