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NFIB Opposes Health Care Reform Proposed By House

Posted by: John Tozzi on July 23, 2009

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.

Reader Comments

Yorlan Alfonso

July 24, 2009 12:11 PM

What everyone seems to be missing in this bill is the cost to companies. Not just the cost from a tax standpoint, but from a relationship with vendors and customers. If a company is taxed how will they make up that amount lossed? Well, by cutting cost in the form of terminating employees, and raise prices to the end user and the outcome would be less sales. The overall outcome of this bill will be devastating to the economy. Goverment only has a one-track mind and its to get everyone insured at any cost and that's not being fiscally responsible.


July 26, 2009 9:12 AM

It's no secret that big insurance companies have been buying up little insurance companies in order to reduce competition. Then these mega insurance companies dump the insured "loss leaders". The private sector has had 30 years to show what they can do to solve the healthcare issue.
The government (taxpayers) already pays for almost 80% of the populations healthcare either directly or indirectly.
I think we should swallow our arrogance and look at what other countries are doing to solve their healthcare issues, and pick from the best.
Please note there is no such thing as Medical bankruptcy in other countries w/ a national healthcare system.
Most people are not opposed to paying for healthcare, but it is no secret we are not being DELIVERED anything close to what we are paying for.


July 28, 2009 5:16 PM

Other countries aren't in better shape, most are looking for change themselves. We live in a nation of obesity for one - change that and reduce the costs. Also, people are misguided by profit driven pharamceutical companies, many of which are not even selling their products in their own countries. They fill prescriptions they never take, they don't research the potential side effects and they do little to educate themselves about their own health (in general, not everyone of course). Education seems KEY. Big missing part.

The plan would be improved by providing less of a burden on small businesses but big business doesn't really want this - it's in their interest to reduce competition. Our business is one that will be directly impacted and will likely be forced to terminate jobs immediately if the bill is passed.


August 19, 2009 3:57 PM

I think that the biggest objection to a government health plan is its 1,000+ pages of confusion.The government is trying to include everything and no one can explain it. As a result they wind up making decisions for all of us that they have no business making. Why not spend the time and money improving the system we have instead of re-inventing the wheel ????


October 14, 2009 8:14 PM

I'm sorry Grant if you don't understand the "1,000+ pages of confusion". Here, let Me help. Instead of "re-inventing the wheel" or making a new, better AND cost effective system. We are "spend the time and money improving the system we have" now!!!!

October 15, 2009 1:56 PM

Again, it is the NFIBs friendship with the International Franchise Association who represent BIG BUSINESS franchisors that makes me question their motivation.

Perhaps this is unfair but I wish someone would explain the affect and effect of the Health Plan on the individual Mom and Pop franchisee who presently cannot generally afford to provide any kind of health insurance coverage for their employees.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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