As the nation’s leading small business association, NFIB opposes the America’s Affordable Health Choices Act (H.R. 3200) because it threatens the viability of our nation’s job creators, fails to address access for all small businesses, limits and destroys choice and competition for private insurance, and fails to address the core challenge facing small business – cost.
Here are the Top 10 Reasons H.R. 3200 won’t work for small businesses:
1. Employer Mandate - Research shows an employer mandate could cost 1.6 million jobs with more than 1 million of those jobs lost in the small business sector.
2. Payroll Tax Penalty - No matter how profitable or unprofitable a business might be in a given year, businesses are forced to pay this tax. The legislation requires that all employers with a payroll of $250,000 or more pay a payroll tax of up to 8 percent if they do not provide “qualified” health insurance to their employees. If an employer chooses to add a worker or increase wages, the tax rate on that employer may continue to go up. Simply put, this is a tax on job growth.
3. Pay-or-Play, Pay-and-Pay and Offer-and-Pay - The legislation establishes a confusing multi-part test that hits both employers who do and do not offer health insurance. A non-offering employer will pay a payroll tax penalty. Small businesses must 1) offer a qualified plan, as determined by a government-appointed board, 2) provide both individual and family coverage, and 3) meet minimum contribution levels, which could be more than they are already paying and can afford. If employees decline coverage and opt into the exchange, that employer is also penalized. All of these added expenses and new rules will simply lead to a greater chance that employees will not be able to keep the coverage they already have.
4. Mandated Minimum Plan with a Big Price Tag - Today, 86 percent of small businesses who offer coverage only offer one plan. Small employers and their employees want the ability to choose from a variety of affordable plans. H.R. 3200 reduces options available to small businesses. The bill gives a political board the power to determine whether an employer plan is “acceptable.” It does nothing to ensure that the new plans will be less expensive than what small employers are paying today and even requires small employers to cover certain services they are currently exempt from under federal law.
5. Exchange Limits Access to All Small Businesses - NFIB has long been a supporter of creating a simpler and more efficient way to shop for affordable insurance, like an exchange. However, this bill fails to provide guaranteed access to the exchange for employers with 21 or more employees. Providing increased access and more choices for some, but not all small business is not reform that small business can support.
6. An All Powerful Insurance Czar - The “Health Choices Commissioner” will have unbridled authority to institute rules and regulations that greatly affect small employers, including the ability to define who is and is not a full-time and part-time employee. Thresholds set forth by an unelected commissioner would be subject to continual changes, leaving small business owners in constant fear of ever-changing compliance requirements.
7. Government-Run Public Option - The public option would further compromise the viability of private insurance and would restrict choice to a single plan: the government-run plan. A reformed, private insurance marketplace can better provide businesses and employees with more affordable coverage and a sustainable choice of plans.
8. The Surtax: A Tax on Job Creation - The surtax imposes an additional tax on some businesses reducing after-tax profits at a time when small businesses are struggling to find capital. Because 75 percent of small businesses are structured as pass through entities, they pay their business taxes at the individual level. More than one-third of small businesses would face the tax. And those most likely to face this tax employ 33.5 million workers – more than one-quarter of the American workforce.
9. Jeopardizes Options That Small Employers Have Today - The legislation actually takes steps to limit the viability and use of health savings accounts (HSA) – jeopardizing a health insurance option that small business owners have and use today.
10. An Employer Tax Credit with Limited Value - While some small businesses can be helped by tax credits, the structure of the credit is critical to its successes. Under H.R. 3200, only small businesses with 25 or fewer employees would be eligible for a subsidy of up to 50 percent of the cost of health insurance for employees. Businesses that have an average annual salary per worker of $20,000 or less get the full subsidy; however, the average wage of full-time employees at businesses with fewer than 10 employees is more than $30,000, meaning that in many cases the value of the credit is already cut in half.