Is penalizing small businesses the best way to fund public health care costs?

Trying to find a way to pay for its $1.04 trillion health-care legislation, the House of Representatives decided to turn to small businesses and the wealthy. Small businesses with payrolls exceeding $400,000 will have to pay an 8 percent of payroll penalty if they don't offer health insurance to their employees. Employers with payrolls of $250,000 to $400,000 would pay a smaller penalty. There would be no penalty on employers with payrolls under $250,000, while some small firms would even get credits to help buy coverage.

In addition to imposing a penalty on businesses that don't provide health insurance, the House proposes collecting additional taxes from wealthy families. Starting in 2011, families making more than $500,000 would have to pay an additional income tax of $1,500 to help subsidize coverage for the uninsured. A family making $1 million would have to pay $9,000.
"This bill costs too much, it covers too few and it has way too much government involvement," Michelle Dimarob, a lobbyist for the National Federation of Independent Business told the Wall Street Journal. "Small business doesn't want any of those things."

According to data from the federation, businesses with five to nine workers represent one million employers. They have average payrolls of around $375,000 per year. The Kaiser Family Foundation found only about half of businesses with three to nine workers offered health benefits in 2008.

As someone who joined the ranks of the uninsured this year when I could not afford to pay Florida's small business group insurance rate of $1,200 per month for a high deductible plan that didn't even start paying for health care until I spent $2,500, I can understand why small businesses can't afford to insure their workers. Rather than impose penalties on small businesses, why not come up with a reasonably priced health insurance package that makes it affordable for people to buy health insurance?

We are the only industrialized nation with 46 million uninsured people. The reason for that falls on our failed health care system, as fellow blogger Bruce Watson clearly spells out. Let's look at ways to truly fix the system rather than find ways to fund a broken system on the backs of our small business employers.

Lita Epstein has written 25 books including Working After Retirement for Dummies.
Read Full Story

From Our Partners