Health Care Reform Must Not Hurt Small Businesses

Weekly column by Senator Susan Collins

While the national unemployment rate has fallen ever so slightly to ten percent, the fact remains that far too many Americans are still without jobs, and their families continue to struggle during this economic crisis. Government at all levels must do everything possible to help revive the economy by creating and preserving jobs.

Small businesses remain our nation’s job-creation engine. Here in Maine, more than 97 percent of employers are small business, and nearly 120,000 Mainers work for firms with fewer than 20 employees. That is why I am so concerned about the effect the Senate health care bill will have on small businesses, and in turn, on jobs in our State and nation.

The rapidly escalating cost of health care has been particularly burdensome for small businesses, the backbone of our economy. Small businesses want to provide health insurance for their employees, but many simply cannot afford to absorb double-digit increases in their health insurance premiums year after year. The cost is simply too high.

A small business owner in Maine recently e-mailed me to say that: “I just received our renewal proposals for our company. Of course, the plans are all up anywhere from 12 percent to 32 percent on the three plans that we offer. Each year, we increase the deductibles to try to keep premium increases to less than five percent, and this year is no exception.

“You are right when you say that we need to address the cost of health insurance, NOT create another vehicle to deliver the services. The current legislation, as I understand it, totally misses the mark.”

How does this bill help small businesses? On balance, it doesn't. This is the analysis of many, including the National Federation of Independent Businesses, the nation's leading small business association. In a statement on the health care bill, the NFIB says "this kind of reform is not what we need. “ “New taxes . . . new mandates . . . new entitlement programs . . . paid for on the backs of small business . . . equals disaster,” the NFIB says.

In short, as the title of the NFIB’s statement’s indicates, "The Senate Bill Fails Small Business."

Even where this proposal tries to help small business, it misses the mark. I support the providing tax credits for small businesses to help cover employee health insurance costs, but the credits for small business in the proposal are poorly structured.

Only businesses with no more than ten workers, paying an average of wage of $20,000, can get the maximum tax credit. If a business hires more workers, or pays higher salaries, its credit is phased-out. In other words, this bill discourages small businesses from adding jobs or raising pay. This just doesn’t make sense.

Small businesses want to provide health insurance to their employees as a way to attract and retain good employees. But they are far too often unable to do so because of the high cost.
Not only does this bill do little to address this problem, the bill makes matters worse by imposing $28 billion in new taxes levied on employers with more than 50 employees that cannot afford to offer health insurance.

There is no question that our health care system is broken and in need of reform. I continue to believe that the American public would like to see a bipartisan bill that brings together the best ideas that achieves the goal of lower health care costs, higher value, and better outcomes. That is why I am continuing to work with my colleagues on both sides of the aisle on bipartisan amendments that would make tax credits available to more businesses while eliminating some of the disincentives to hire more workers, as the current bill would do.

Along with Senator Joe Lieberman, I have introduced a package of amendments that would help to constrain costs by improving the health care delivery system. For example, our proposal would penalize hospitals that don’t work to reduce preventable infections, which results in a cost each year of $30 billion to our health care system, not to mention much avoidable suffering. We are also working to create more transparency and more incentives for better health care outcomes, which will in turn, help lower health care costs.

It is critical that the Senate keep working toward an alternative health care reform proposal that reduces health care costs, improves outcomes, and equally important, enhances, not hinders the ability of small businesses to succeed.