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Obama Courts Small Business on Health Care

Posted by: John Tozzi on October 29, 2009

President Obama pushed hard today to convince small business owners that they would gain from health care reform. His speech to small business owners in Washington came as House Democrats released a reform bill they could vote on as soon as next week. The White House this morning also published a new report selling the benefits of health reform to Main Street. Among the talking points:

  • 3.6 million small businesses could qualify for tax credits to subsidize insurance. These include businesses with 25 or fewer employees and average wages under $40,000.
  • Health insurance exchanges could save firms with fewer than 50 employees 25% off the expected cost of single premiums in 2016.

Small business is center stage in the public debate during the week when both chambers of Congress released new versions of their health reform bills. Obama’s latest push comes late in a week that began with small business health costs leading the Sunday New York Times. And it follows the administration’s focus last week on extending recovery efforts by beefing up loan guarantees and encouraging community banks to expand small business lending. As Robb Mandelbaum reported in the Times, the lending initiatives seem intended at least in part to court Maine Republican Sen. Olympia Snowe’s vote for health reform.

As for the House bill out today, BW’s Jane Sasseen looks at the battle ahead:

The House bill includes higher penalties on businesses that don’t provide insurance for their employees; those with more than 100 workers would be expected to cough up a penalty of 8% of payroll. And individuals who don’t get coverage could face a penalty of 2.5%.

But the biggest difference — and the biggest fight ahead — comes in how the bill would be paid for. While the Senate wants to tax so-called “Cadillac” health care plans in order to fund health care reforms, the House wants to impose a surtax of 5.4% for individuals making adjusted gross incomes of over $500,000 and couples over $1 million a year to pay for a chunk of their bill.

Companies with payroll under $500,000 would be exempt from the employer mandate. The new tax proposal on high incomes (which seems unlikely to make it past the Senate into a final bill) is sure to draw sharp criticism. Prepare for a rush of rhetoric about how the House’s proposed tax would fall on the shoulders of small businesses. For the record: Most small business owners aren’t earning that much. (Remember, AGI is income after business expenses and other adjustments.)

In separate statements, the NFIB panned the House bill and struck a cautious tone toward Obama. The group remains opposed to employer mandates and a public plan, even under the “opt-out” compromise in the Senate. The Small Business Majority supported today’s House bill. Now that Congress has concrete proposals out of committee, we’ll look past the rhetoric and unpack the details that matter to small business owners in the coming days.

Video of Obama’s speech today is below.

Reader Comments

Tom Degan

October 30, 2009 08:23 AM

I don't know what kind of health care reform will come out of this session, but I strongly suspect it won't be much. There is, however a silver lining behind this very dark cloud. I am reminded of the Civil Rights Act of 1957. Don't be embarrassed if you've never heard of it, there really isn't a hell of a lot to remember about it; a mere pittance, really - a scrap of leftovers tossed out to "American Negros" (in the parlance of the age) in order to appease them. But it made the passing of the Civil Rights Act of 1964 - the one we remember - all-the-more easier seven years later.

We'll live to fight another day.

Tom Degan

Charley Ellison

October 30, 2009 01:16 PM

The long-term costs to small businesses and their owners will make the short-term savings of Obomacare look like a joke... in hindshight

Unfortunately, many businesses are in a cash-flow crunch. The cost of being a good corporate citizen - paying health premiums, local, state and Federal taxes of all varieties - is rising and becoming more unpredictable. Small business owners are faced with an Ishmael moment: Hungry enough today to trade a birthright for today's bowl of soup.

Please, business leaders who recognize the cost of turning power over to the Feds, take time speak up against the onslot of tax and regulation to pay for this health-care soup!

Charley Ellison

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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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