Health Care Reform – Dead or Alive?

(News analysis by health insurance expert Scott Lyon, SBAM’s Vice President Small Business Services)


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Prior to Tuesday night, Speaker Nancy Pelosi, Majority Leader Harry Reid and representatives of the White House were working behind closed doors to merge the differences between the House of Representatives’ version of health care reform and the Senate’s version.  But the upset win by Scott Brown in the Massachusetts special election for the Senate (the seat previously held by Ted Kennedy) throws a rather large wrench into their plans. 

Why is that?  Because as soon as Brown is sworn in, the Democrats no longer will hold a supermajority of 60 votes in the Senate necessary to get past a Republican filibuster.  As a result, Democratic health care reform advocates are scrambling to decide on a course of action  by weighing the political message of the Massachusetts election against their desire to pass comprehensive health care reform.

The following are possible scenarios currently being discussed:

  • The House of Representatives could pass the Senate bill under an agreement that high priority items of concern between the two versions would be addressed in separate legislation under budget reconciliation rules, which require only a simple majority vote. Examples of what the House would like to see addressed under budget reconciliation include the deal unions made with House and Senate leaders to delay for five years the “Cadillac Tax” on health insurance for their members, as well as the administration and House preference for a national health insurance exchange over a state-based exchange.
  • Continue negotiations with congressional leaders and the administration with the expectation that they can reconcile House-Senate differences, send a final bill to the Congressional Budget Office for scoring, and allow the bill to be posted for 72 hours before a final vote is taken.
  • Scale back a bill that can garner Republican votes in the Senate and pass in the coming weeks or months.
  • Let the bill die altogether and start over.

House and Senate leaders spent the better part of 2009 attempting the massive overhaul of the health care system. President Obama made it his number one domestic agenda item beside the stimulus legislation. Going forward, each option listed above comes with its own barriers and political consequences. Now congressional leaders will have to weigh the consequences of not passing a bill ,where so much political capital has been spent, versus passing some form of health care reform in the face of  the historic election in Massachusetts.

While much has changed in the last 24 hours, what has not changed is the need for health care reform.  For the small business community finding a way to make quality health insurance affordable is still the number one priority.  SBAM and our national affiliate the National Small Business Association (NSBA) will carry that message and our suggestions on a reasonable health care reform bill that serves the needs of all small business owners and their employees.

Small Business Champion Podcast: GOP Budget Reform Ideas (7:10)

In this week's Small Business Champion podcast, SBAM's Vice President Communications Michael Rogers talks with Vice President Government Relations David Palsrok about the Senate Republicans' package of budget reforms that include a 5% pay cut for state employees.


Click here to listen to this week's podcast.



Number and Quality of “Michigan 50 Companies to Watch” Nominations Robust Despite Struggling Michigan Economy

The number of companies nominated for 2010 Michigan 50 Companies to Watch, a part of the Michigan Celebrates Small Business Awards program, is at the highest level in the six year history of the program.

“We expected a good number of companies to answer the call for applications, and in the end we received 174 application submissions, resulting in 119 finalists,” says Joy Kitamori, manager of the Companies to Watch program for the Edward Lowe Foundation. “Not only did we get a near record number of applications, but the quality of the companies is really impressive,” Kitamori says. “We think this demonstrates that second-stage companies are well-situated to thrive and expand despite Michigan’s economic circumstances.”

Michigan Celebrates Small Business is a premier annual program to recognize entrepreneurs and small business supporters in a variety of categories. The program is a cooperative effort of the U.S. Small Business Administration – Michigan, the Small Business Association of Michigan, the Michigan Economic Development Corporation, the Michigan Small Business & Technology Development Center and the Edward Lowe Foundation.

The Michigan 50 Companies to Watch program is sponsored by the Edward Lowe Foundation and each year recognizes and celebrates the contributions, innovation and energy of 50 diverse second-stage companies in Michigan. Winners will be recognized April 29, 2010, at the Michigan Celebrates Small Business event and dinner at the Lansing Center in downtown Lansing. For more information, go to

Underwriters for this year’s Michigan Celebrates Small Business event are National City (now a part of PNC), Clark Hill PLC, the Michigan Economic Development Corporation, the Michigan Certified Development Corporation, Accident Fund Insurance Company of America, IBM and Dynamic Edge Inc.

“The Michigan Celebrates Small Business event plays a key role in seeding and growing Michigan’s new economy businesses,” says Don Lee, Chief Marketing Officer of Clark Hill PLC. “Clark Hill represents a diverse range of clients ranging from individuals and new economy businesses to Fortune 500 corporations.  There is a synergy between the event and Clark Hill, this is why we’ve supported the event since its inception six years ago.”

Media partners for Michigan Celebrates Small Business are MiBiz, Crain’s Detroit Business, Upper Peninsula Business Today, the Traverse City Business News,, WWJ Newsradio 950 and the Greater Lansing Business Monthly.


SBAM and Other Business Groups Applaud Leadership By Senate Republicans on Reform

SBAM, along with other business and trade organizations from around the state, today applauded the leadership displayed by Senate Republicans in their announcement of 10 bold reforms that could trim state spending by more than $2 billion. Taxpayers are demanding that elected officials be good stewards of their money and Senate Republicans are living up to that expectation by putting forth a comprehensive plan that can facilitate passage of a balanced budget without increasing taxes.
Rob Fowler, President and CEO of SBAM said, “Business owners large and small are making tough decisions to remain competitive in a down economy, so we are glad to see Senate Republicans are stepping up to the plate to force the state to live within their means.”

“Michigan is facing unprecedented economic challenges and enacting these reforms is exactly what Michigan needs to reduce cost barriers and be competitive in the global economy”, said Mike Johnston Vice-President of Government Affairs for the Michigan Manufacturers Association.

In September, statewide business and trade organizations released a list of 19 suggested reforms that the Legislature should undertake in an effort to combat chronic structural budget deficits. “We have been meeting regularly with Legislators in both chambers and both parties to urge them to reform and revitalize Michigan, these are exactly the kind of reforms we support and Legislators have indicated they would like to see enacted,” said Bill Martin, CEO of the Michigan Association of Realtors.

“The Senate’s bold agenda of reform demonstrates that tax increases are not necessary and the best path to job creation and a revitalized economy is by making government smaller and more efficient,” said Jim Holcomb, Vice-President of Business Advocacy and Associate General Counsel of the Michigan Chamber of Commerce.

Members of the coalition (which also includes the Detroit Regional Chamber, Grand Rapids Area Chamber of Commerce, Lansing Regional Chamber, Associated Builders and Contractors of Michigan, Kalamazoo Regional Chamber of Commerce, Michigan Association of Home Builders, Michigan Bankers Association, Michigan Association of Insurance Agents, Michigan Business & Professional Association, NFIB, Michigan Distributors and Vendors Association, Michigan Grocers Association, Michigan Soft Drinks Association and the Michigan Restaurant Association) look forward to working the Legislators on both sides of the aisle and both sides of the Capitol to enact cost-saving reforms that will move Michigan forward.

The 10 Senate Republican initiatives cover six key reform areas for an estimated total savings of $2.24-2.6 billion:

    * Public employee health care ($615 million in savings);
    * Local police and fire ($70-118 million);
    * K-12 school spending ($363-663 million);
    * Medicaid spending ($160-500 million);
    * Government efficiency (indeterminate); and
    * Public employee compensation ($1.2 billion).

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SBAM in the News

SBAM President and CEO Rob Fowler is quoted in today's Detroit News in a story healdlined "Small businesses in distress." Excerpt:

Businesses that are closing for lack of credit run the gamut, said Rob Fowler, president and CEO of the Small Business Association of Michigan. No one is safe, and there is no protection from banks that suddenly demand loans be paid back, even if the business has no cash to repay it. "This is an acute problem that's happening at a higher rate than last year," Fowler said. "It's very serious, it's very real."

Read the entire story here.


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. 


  • 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.


  • 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