Tuesday, July 27, 2010

Health System Reform: Small Businesses Will Pay Fines Rather Than Buy Health Insurance

From BNA's Health Care Daily:

Small business owners speaking at a Chamber of Commerce forum July 26 said they will pay fines imposed under the new health reform law rather than purchase health care coverage for their employees.

In addition, Chamber of Commerce Senior Vice President Randel Johnson said that the business organization is looking at legal options for challenging the Patient Protection and Affordable Care Act (PPACA, Pub. L. No. 111-148).

“We're going to have to live with it for awhile, and we're going to have to deal with it,” Johnson said. He and small business owners spoke at a forum in Washington, Behind the Curtain: the Health Care Law's Impact on Small Business, sponsored by the chamber, the National Federation of Independent Business, and the American Action Network. The Chamber of Commerce strongly opposed the new law.

“We'll absolutely be paying the penalty,” said Scott Womack, president of Womack Restaurants in Terra Haute, Ind. “There's no way we can buy the health insurance,” Womack said. Under PPACA employers with at least 50 employees must offer coverage to workers beginning in 2014 or pay penalties, which are not tax-deductible, of $2,000 per employee.

The cost of paying the penalty will total about $2,800 per employee because it is not tax-deductible, Womack said. But average profits per employee for the restaurant industry are only about $2,600, he said. “We've got a big problem in our industry,” he said. Raising prices is difficult in the current economy, he said.

Womack estimates it would cost his company about $8,000 per employee to cover the 360 full-time employees who would have to be covered under PPACA. Womack expects to reduce his payroll by 15 percent to 20 percent in response to the new law.

Sen. Mike Johanns (R-Neb.) was critical of the health care bill, which he said will increase taxes by $4.5 billion and will hit small businesses particularly hard. He called for passage of legislation he and other Republicans have introduced that would repeal a provision in PPACA requiring businesses, beginning in 2012, to file 1099 tax forms for all services totaling more than $600 per year from each vendor. The requirement will be overly burdensome for businesses, especially small businesses, he said.

“This mandate has absolutely nothing to do with improving the health care of any individual in this country and it should not be a part of this law or any other law,” Johanns said. “This administration bridles at the notion that they're anti-business. But I have to tell you, I haven't been around a more anti-business adminstration in my entire career,” Johanns said.

The "big picture" impact of Health Care Reform should be noted as it will inherently affect all medical personnel, including MSPs.

Hansard, Sara. "Small Businesses will Pay Fines Rather than Health Insurance." BNA's Health Care Daily Report. 27 July 2010. Web. 27 July 2010.

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