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percent of the cost of health insurance premiumefor full-time employees under the healthj care reform bill being considered by the They also would be required to pick up at least some of the tab for insuring part-time employees. Businessezs that don't provide this minimum levep of coverage would be required to pay the federall government a fee based on 8 percen oftheir payroll. Small businesses undert a yet-to-be-determined threshold would be exempted fromthis "play or pay" The chairmen of three House committees with jurisdiction over health care introducedx their draft legislation June 19, offering the most details yet on how health care reform coulcd affect small businesses.
Under theitr bill, small businesses and individuals could shop for insurancde through anational exchange, which would include a government-rum plan as well as private insurers. Tax credit would be available to help small businesses affordthe Rep. Henry Waxman, D-Calif., said the legislation would fixthe "completelyg dysfunctional insurance market" for smal businesses, which face "unaffordable rate increases every year. Waxman chairs the House Energyg andCommerce Committee. Health insurance premiums for U.S. businessexs increased by 9.2 percent this and are expected to increase another 9 percentfnext year, according to PricewaterhouseCoopers.
Smalpl businesses often face much higher rate While most small businessew agree the current health insurance marketis dysfunctional, there's a lot of disagreemeny over whether the House bill woulxd cure the problem or just make it Mike Draper, who owns a retail clothing store and desighn business called Smash in Des Iowa, likes what he sees in the Draper thinks adding a public plan to the insurancer mix would hold down premiums by creating more competitiohn in the marketplace. "I don'tg have a whole lot of confidence in the systenm wehave now," Draper said.
Draper's company currentl y doesn't offer health insurance to itsseven full-time workers, but insteard reimburses them for the cost of individual policies that they buy on theie own. That's fine with his employees, who are in their 20s and don't want their insurance to be tied totheifr job. The reimbursements now account for 6 percentof Smash's but that could jump to 22 percent in four when Draper expects everyone on his management team to have creating the need for family plans. His business couldn'ft handle that expense, he If the House bill were enacted, he woulcd consider buying insurance through the exchange if it were easyto use.
But he migh decide to pay the 8 percent payrol fee instead and then reimburse his employeezs for some of the cost of the policies they purchase throughthe exchange. Draper, who was scheduled to testift before the House Ways and Means CommitteeJune 24, thinkse employers should be required to help pay for theif employees' health insurance. Like Social Security contributions, this sort of responsibilit is "kind of what you signe d up for" when you become a businesds owner, he said. Other small businesse owners, however, think the House bill imposes too tougjh of a standard onsmall businesses. The requiremen to pay 72.
5 percent of an employee's premium for individual coverags "is much too high for many smalo businesses," said Karen Kerrigan, president and CEO of the SmallBusinesxs & Entrepreneurship Council. The only way many smalll businesses can afford coverage is by makintg employees pick up more of the she said. Arlington, Va.-based Company Flowers & Gifts for example, pays 50 percent of the cost of healthg insurance forseven full-time employees.
Even that may not be affordable next year, because "our rates are going to skyrocket,"" co-owner John Nicholson told the Housre Small Business Committee earlier this Small businesses with fewer than 200 employees paid an averagre of 86 percent of employees' premiums for individua coverage in 2008, according to the Kaisedr Family Foundation and Health Research & Educationap Trust. That share dropped to 66 percentr forfamily coverage, just above the 65 percent threshold calle d for in the House proposal.
who testified on behalf of the National Federation ofIndependent Business, said insuranc market reforms, exchanges and tax breaks would help smalpl businesses, but employer mandates wouldr hurt low-margin businesses and public plans could driv e private insurers out of the Rep. Robert Andrews, D-N.J., said the Houswe plans to exclude very smallbusinesses -- such as gas stations and delicatessens -- from the employedr mandate. "We certainly don't want to imposre any burden on them," he Instead, the mandate is targeted at businessesthat "haves the wherewithal" to provide insurance but choos not to, he said.