Small-business groups such as the Tire Industry Association (TIA), the U.S. Chamber of Commerce and the National Federation of Independent Business (NFIB) are unhappy with the sweeping healthcare bill President Barack Obama signed into law March 23, while labor unions like the United Steelworkers (USW) are cheering the law, saying it will help lower skyrocketing healthcare costs.
We're very concerned about the impact this could have on small business, said Paul Fiore, TIA's director of government and business relations, about the healthcare legislation.
There will be a lengthy period before we know the full impact, Mr. Fiore said. Much of the language of this legislation probably has yet to be written, but there are some things that leap out at us as fairly destructive, such as the new fees and penalties.
The House of Representatives passed the Senate version of the healthcare package late on March 21 by a razor-thin margin of 219 to 212. Not one Republican House member voted for the bill and 34 Democrats voted against it.
Shortly thereafter, the House passed by 220 to 211 a fix-it measure in which it made changes to the bill it had just approved. On March 25 the Senate passed, by a vote of 56 to 43, the reconciliation bill then sent it back to the House for minor corrections to a provision on student loans.
The new law phases in a national healthcare plan that promises to extend health insurance coverage to 94 percent of Americans by the end of the decade.
This year will see the formation of a high-risk health insurance pool for uninsured people with pre-existing conditions. Starting six months from now, all insurance companies will be required to extend health insurance coverage to dependent children until age 26 and are forbidden to deny coverage to children with pre-existing conditions. The pre-existing condition prohibitions will be extended to the entire population in 2014.
Small businesses with 25 or fewer employees will receive, beginning this year, a tax credit for providing health insurance to employees. However, starting in 2014, employers with 50 or more workers will face a penalty of up to $2,000 times the number of workers in their companies if any of their employees get coverage individually through one of the health insurance exchanges that begin that year, rather than through the company.
That $2,000 penalty is a fluid number at the moment. The original bill passed by the Senate specified a penalty of $750 per worker. However, the House reconciliation billwhich the Senate must now vote onraises that limit to $2,000. So both figures are correct until the Senate passesor doesn't passa fix-it measure.
By 2014, U.S. citizens and legal residents will face financial penalties from the Internal Revenue Service if they do not have health insurance, unless they can prove financial hardship. That same year, however, income-based tax credits will become available to most consumers buying coverage from health insurance exchanges.
In 2013, Medicare payroll taxes will rise for individuals making more than $200,000 per year or couples making more than $250,000 per year.
The penalties and increased taxes are particularly worrisome for TIA, according to Mr. Fiore.
The $2,000-per-worker penalty for companies with more than 50 employees? If you own three or four tire stores, you have that many workers, he said. And a lot of executives in our member companies will be affected by the increase in the Medicare payroll tax.
Both the Chamber of Commerce and the NFIB stated flatly that small business cannot afford the new healthcare law.
Americans will not be fooled, said Chamber President and CEO Thomas J. Donohue in a press release. This $900 billion, 2,800-page bill is not healthcare reform. It fails to fix what is broken and risks breaking what already works. It will drive up healthcare costs and make coverage less affordable for businesses and families.
The NFIB issued a fact sheet to demonstrate why the healthcare law is unaffordable. For example, it said, only 12 percent of U.S. small businesses would qualify for the tax credit for buying health insurance for workers. Furthermore, only companies that pay each worker $25,000 per year or less are eligible for the full credit.
Also, a new $6.7 billion tax on insurers will end up being a tax on small business, according to the NFIB.
These new costs will be passed solely onto the fully insured market, where nearly all small businesses buy their insurance, the federation said. The tax exempts self-insured plans, meaning big business and labor unions are exempt.
In any case, small business concerns about the cost of the healthcare law will be moot if the attorneys general of 14 states have their way.
The attorneys general of 13 of those statesAlabama, Colorado, Florida, Idaho, Louisiana, Michigan, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washingtonfiled suit in federal district court in Pensacola, Fla., five minutes after President Obama signed the bill. The suit charges that the new law is unconstitutional. Virginia filed its own challenge to the law at the same time.
Not all aftermarket or small business associations, however, were completely against the healthcare legislation. Stuart Gosswein, senior director of federal government affairs for the Specialty Equipment Market Association (SEMA), called the bill a mixture of The Good, the Bad and the Unknown.
SEMA is happy with the creation of health insurance exchanges, also known as Small Business Health Option Programs or SHOP Exchanges. Those will allow individuals and small businesses to pool together to buy health insurance, and this is similar to the Association Health Plan legislation SEMA supported a few years ago, Mr. Gosswein said.
The SEMA-supported exchanges should spur competition, thus potentially allowing small business owners to provide insurance options with lower premiums, said a SEMA eNews bulletin Mr. Gosswein sent to association members March 25.
On the other hand, SEMA is no fonder of the new mandates or the potential fines for employers with 50 or more workers than any other business group, Mr. Gosswein said. There are further unsatisfactory features in the bill, he added.
There's not enough tort reform in the bill, and it doesn't do enough to drive down costs, he told Tire Business. There's also the timeline. We won't have SHOP Exchanges for several years, and meanwhile healthcare costs will continue to spiral.
One group quite pleased with the healthcare bill is the United Steelworkers (USW), which represents more than 22,000 rubber workers at 21 U.S. tire plants.
Reform will help get our economy back on track by lowering skyrocketing healthcare costs, saving jobs and relieving working families and businesses from the crushing medical bills that are causing bankruptcy and heartache, said USW International President Leo Gerard in a statement issued immediately after the House vote.
It not only makes sense economically, but it's morally the right thing to do, Mr. Gerard said. Our union has fought for a long time for healthcare for all. We consider it a basic human right. These reforms are desperately needed and move us a huge step toward that goal.
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