What The Obama Healthcare Proposal Means for Small Business

Guest post by: Jess Wells
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Cisco Innovators Forum guest blogger Jeanne Quinn reports on the National Small Business Association’s reaction:

In response to the bipartisan, bicameral health summit at the historic Blair House, President Obama released his health care reform proposal that attempts to reconcile the House and Senate-passed health care bills.

The President’s proposal generally defers to the Senate’s Patient Protection and Affordable Care Act (H.R. 3590), but identifies the administration’s preference where it deviates for the House’s Affordable Health Care for America Act (H.R. 3962). The 11-page report is not prescriptive; thus, the non-partisan Congressional Budget Office (CBO) has not assessed the impact of Obama’s changes to health care costs. Nonetheless, the administration suggests the cost of the new proposal will increase the overhaul from $871 to $950 billion over 10 years.

The following provides a brief overview of the provisions that have a specific impact on small businesses:

Cost-Containment

- Adopts several provisions from the President’s FY2011 Budget and Republican bills to eliminate fraud, waste and abuse.

Insurance Market Reforms

- Establishes a new, federal Health Insurance Rate Authority to regulate insurance rates; however, it is unclear how it will work in conjunction with traditional state-based insurance oversight.

- Does not include the House-passed public health insurance option.

- Maintains state-based health insurance exchanges in lieu of national health insurance exchanges favored in the House-passed bill.

Shared Responsibility

- Adopts the Senate’s version of the individual mandate, but lowers the penalty for noncompliance from $495 to $325 in 2015 and from $750to $695 in 2016.

- Adopts the Senate’s “free-rider” proposal that exempts employers with under 50 employees from any requirements to pay an assessment for employees with respect to offering health insurance. For employers with more than 50 employees, the following free-rider structure applies.

- If an employer offers coverage but it is determined to be “unaffordable” based on an employee’s income, and the employee goes to the health insurance exchange for coverage, then the employer pays $2,000 per employee.

- If an employer does not offer coverage, but the employee goes to the health insurance exchange for coverage, then the employer must pay $750 per employee.

- For employers who are responsible for any of these assessments, the first 30 employees are exempt from any calculations.

Revenue Raisers

- Increases the threshold on the Senate-passed excise tax on high-cost insurance plans (i.e. Cadillac plans tax) from $23,000 to $27,500 (family coverage) and from $8,000 to $10,200 (single coverage) and delays its implementation from 2013 to 2018.

- Thresholds are indexed to general inflation plus 1 percent, but do not adjust until the implementation date; thus, the increase could be undermined by rising health care costs prior to its implementation.

- Excludes dental and vision benefits.

- Maintains Senate-passed 0.9% Medicare HI tax increase for employee portion for individuals making over $200K and families making over $250K.

- Expands the Medicare HI tax of 2.9% on unearned income (interest, dividends, annuities, royalties and rents).

- Carves-out S-Corps from this expansion.

- Earned income tax goes to Medicare HI trust fund and unearned income tax goes to Supplemental Medical Insurance (SMI) trust fund.

Although delayed and slightly altered, the President’s proposal maintains the health insurer and medical device fees/taxes that have been assessed by CBO as likely passed down to the end consumer."

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About the Author: Jess Wells

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Jess Wells, Editorial Director of Cisco's Innovators Forum, and her team of guest bloggers interview experts, entrepreneurs and authors on how to run a small business better. To learn more about small business best practices and the technologies behind them, visit www.CiscoInnovators.com.
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What The Obama Healthcare Proposal Means for Small Business

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