Congress's Health Care Reform Problematic For Small Businesses

Small businesses have trouble paying for health-care now, but under a proposed bill, they would have to buy it or face the penalty.

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A couple days ago the Journal had a great, lengthy report on how small businesses are often unable to afford health-care for their employees.  You know it's bad when even a health-care consulting company hits a wall:

The problem? The Washington, D.C., company just can’t afford to cover employees—despite a growth spurt that has left it desperate for additional staff. Only health savings accounts with catastrophic coverage seemed affordable, but they didn’t provide enough coverage to make Ms. Gleason comfortable. Traditional plans with more-comprehensive coverage and lower deductibles came in between $750 and $950 per month per employee, and that’s just not affordable, Ms. Gleason says. (For her part, Ms. Gleason is currently covered by the domestic-policy plan that her partner’s employer offers.)

The article also said that when it comes to the policy proposals going around Congress, "any kind of employer mandate to pay for coverage would exclude small businesses."

But today, the same newspaper reports that's not what's happening.

Under a proposed House bill, all small businesses with payrolls over $250,000 would have to either provide insurance coverage for their employees or pay a penalty.

Just how many businesses  have enough payroll to face the penalty?

According to 2006 data from the federation, businesses with between five and nine workers, representing about one million employers, had an average payroll of around $375,000 a year. A report from the Kaiser Family Foundation found that only about half of firms with three to nine workers offered health benefits in 2008.

The bill could also be a burden even on firms with under $250,000. The prospect of being hit with huge health-care costs once a business hits the $250,000 mark could be a disincentive for growth.