Resources

Union Tax Deal a Slap in the Face to Small Business

The announcement late yesterday that the White House brokered a deal with unions to exempt them from the proposed excise tax on so-called “Cadillac” plans delivered a stinging punch to small business. SBAM’s national affiliate the National Small Business Association (NSBA) has repeatedly called on Congress and the administration to seek alternative methods of paying for the bill as the excise tax will more than likely be passed on to small businesses.
 
“Contrary to all the pro small-business rhetoric we’ve heard from Congress and the White House, this back-room deal with unions sends a loud-and-clear message to America’s small businesses: we have other priorities,” stated Todd McCracken, president and CEO of NSBA.
 
As reported, the White House agreed to exempt unions from the excise tax on high-cost health insurance plans until 2018, while small business would be forced to pay it starting in 2013. The deal would raise slightly the threshold for the 40 percent tax to plans that cost more than $8,900 for individuals and $24,000 for families. The agreement also included the exclusion of vision and dental from the overall calculation—a minor concession.
 
For many months, NSBA has been warning against this tax because it will punish small businesses with plans that cost more simply due to the make-up their workforce. There is no specific prohibition against insurance companies avoiding the tax by charging higher premiums to all small businesses. Small-business owners will have to complete detailed and complex reports on every single company they use for their benefit plans. Finally, this tax is NOT indexed for medical inflation and will begin to ensnare more and more small businesses every year.
 
From day one, NSBA has been calling for a more reasonable and fair method of paying for this bill by simply limiting the tax exclusion for employer-provided health insurance.
 
There is little disagreement that small businesses have been hit the hardest when it comes to rising health care costs—back in 1995, 67 percent of small businesses offered health insurance, today that number is down to 38 percent. According to NSBA’s 2009 Year-End Economic Report—to be released Jan. 20—health care costs are becoming a larger barrier to job growth than they were just six months ago.
 
“Small businesses are barely staying afloat in this terrible economy and few of us can afford quality health insurance,” stated Keith Ashmus, NSBA chair and co-founding partner at Frantz Ward, LLP in Cleveland, Ohio. “Now that this agreement has let expensive union plans off the hook, small businesses are very reasonably apprehensive that we’ll be left paying their share of the bill.”

 


SBAM Leader Quoted in Detroit News Article "Congress' health reform puts some employers in tight spot"

SBAM board member Jerry Grubb, owner of Wee Discover Child Daycare and Learning Center in Waterford, was quoted in today's Detroit News article titled "Congress' health reform puts some employers in tight spot." Excerpt:

The House and Senate bills would provide sliding-scale tax credits for small businesses to help them pay for health coverage. But the Grubbs wouldn't qualify because the House limits the credits to businesses with fewer than 25 employees, while the Senate restricts the premium subsidies to those with no more than 25 workers. "I can't afford it," said Grubb. "To remain profitable, you have to make up a loss somehow. "You can raise the price of your product or you can cut wages. How does that help my customers or my employees?"

Read more here.

 


Small Business Sends Congress Health Care Reform Checklist

SBAM’s national affiliate the National Small Business Association (NSBA) sent a detailed letter to Congress urging their consideration of small business as they work toward combining the House-and Senate-passed health care reform bills. Of paramount importance to small business: contain and reduce the cost of health care.

 


In this tough economy, more and more small-business owners are being forced to make the tough decision between keeping their employees and keeping their health insurance. Congress must do everything in its power to make health insurance affordable NOW to ensure that small businesses can stop layoffs and start hiring.

 


In conjunction with the detailed letter, NSBA has compiled a comprehensive yet succinct checklist of what small business needs in any final reform package.  This list highlights pieces of both the House and Senate bills that are preferable to small-business owners, and suggests several critical changes. 

Mandates

  • Oppose any employer mandate as a threat to job growth.
  • Support the House model for a strong individual mandate to ensure there would not be risk selection as healthy individuals opt-out until they need coverage.
  • Oppose Senate language that arbitrarily excludes the construction industry from the overall small-business exemption to the employer mandate.

Insurance Market Reforms

  • Support Senate language on market reforms such as guaranteed issue policies, the elimination of rating based on preexisting conditions and health status, and the 3:1 age rating rule.

Tax benefits for small businesses

  • Support the Senate version of tax credits
  • Include language to end the prohibition on self-employed business owners from fully deducting the cost of their health insurance—something all other business owners and workers are allowed to do.
  • Support the inclusion of Senate language (Section 9022) to establish simple cafeteria plans for small businesses.

Exchanges

  • Support Senate state-based health insurance exchanges in lieu of the House-proposed national exchange.
  • Oppose the Senate’s free choice voucher provision which could negatively impact other employees.

Rein-in the cost of health care

  • Support, expand and expedite Senate provisions on value-based purchasing programs and the Independent Payment Advisory Board to include all providers and facilities, and ensure small business representation on any such advisory board.
  • Support and expedite all Medicare pilot projects in the House and Senate proposals, and include adjustments to the sustainable growth rate formula for physicians and other providers in Medicare Part B within the context of this bill—not as stand-alone legislation.
  • Support as a good first step the Senate’s medical malpractice language that provides modest grants for state demonstration projects, and work toward more broad, long-term malpractice reform.

Coverage and Delivery Systems

  • Support the minimum actuarial value specified in the Senate proposal (60 percent) and ensure small-business representation and consultation on any council to develop and evaluate the required basic health insurance plan.
  • Include in final legislation the ability to use health savings accounts (HSAs) and health reimbursement accounts (HRAs) in combination with high-deductible plans. While neither bill is ideal, the Senate’s language on HSAs is preferable to the House proposal.
  • Support Senate language providing for “young invincible” policies and expand eligibility to certain small businesses.
  • Oppose a

SBAM President on Economic Turnaround Panel Discussion Jan. 27 in Lansing

SBAM President and CEO Rob Fowler will participate in a panel discussion/forum about Michigan’s Economic Turnaround -- Policy Innovation for Michigan’s Entrepreneurs on Jan. 27 in Lansing. The event, sponsored by the Michigan State University Institute for Public Policy and Social Research, will take place from 11:30 a.m. to 1:30 p.m. in the Mackinac Room of the Anderson House Office Building.

This forum will look at the policy needs of small business employers, incentives for pursuing new ideas, and supportive network tools that lend to future economic success.

There is no charge to attend. A light lunch will be provided on a first-come, first-served basis. Register by emailing ippsr-action@ssc.msu.edu or by calling 517-355-6672.

 




SBAM Urges Congress to Reject Federal Health Insurance Reform

(by SBAM’s Vice President Small Business Services Scott Lyon)

 


The Small Business Association of Michigan (SBAM) and our members - 8,500 business owners and their 100,000+ employees - from all across the state, understand the need for health care/health insurance reform. We recognize that the health care system is a problem for companies who purchase coverage in the small group or individual market – it is a problem because health care simply costs too much. The ways these costs manifest themselves to a small business owner are via premiums. But, it is very important to understand that the cost of delivering health care and the frequency of use drive premiums, not the other way around. The current health bills being reconciled in Congress seem to miss this point.

 


Therefore, as the Senate and House leadership continue its work toward health care/health insurance reform, SBAM has many concerns and four overriding questions:

 


  • Whatever happened to the goal of lowering health care costs? CBO estimates that the change in the average premium per person resulting from the legislation would be negligible (relative to current law). The individual market fares much worse, and is estimated to increase an additional 10% – 13%. Remember that normal health care inflation runs on average about 10% a year. In other words, this legislation badly misses the point that President Obama has been trumpeting; that is, the legislation must bend the cost curve, or in layman’s terms, must slow or reverse the rising cost of health care.
  • When the tax credits, grants, etc. - that simply mask the actual cost to provide insurance to employees - end, will small employers be able to afford coverage or the fines? How many small businesses will close their doors as a result of this legislation?
  • Is the Michigan economy really in a position to spend our tax dollars funding healthcare for other states, each of which enjoy a better economy and lower unemployment?
  • As a candidate, President Obama promised us that healthcare negotiations would be covered by C-SPAN "so that the American people can see what the choices are." Really, when should we tune in?

 


The uninsured need a solution, but the solution being considered has the real potential to economic disaster for everyone attached to the health care system including employers, employees, providers and patients. The danger is that it will cost many times the $1 trillion price tag now estimated. Outside of Washington, who in their right mind would consider such a thing? We urge Congress to reject this legislation.

 


The Governor’s “Grand Bargain”

In her year-end press conference last month, Gov. Granholm discussed the challenges that the state faces in the current year.  As part of this discussion, she broached the subject of tax and government reforms.

The Governor indicates that she is seeking a “grand bargain” on restructuring the state’s tax system.  While details of what this grand bargain would entail are scarce, the Governor has mentioned expanding the sales tax to services and lowering the current 6% rate. 

Governor Granholm defined the term grand bargain as where… “Everyone gives something; everyone gets something.  There’s pain all the way around.”

Some business groups have put forth plans for an expanded sales tax on services combined with spending reforms and re-structuring of the MBT, including elimination of the surcharge.  Speaker Andy Dillon has also been involved in such talks.

We at SBAM have been part of the coalition of business groups involved in these tax and spending reform discussions.  While we support elimination of the surcharge and business tax reforms that will make Michigan more competitive, we remain opposed to the idea of expanding the sales tax. 

To this end, we have a tax taskforce that has been looking at the various proposals and the “grand bargain” will be a point of emphasis at our upcoming Board meeting.

Rest assured that SBAM will be involved in these discussions and we will be looking out for the best interests of Michigan’s small businesses.


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