Small businesses are the engine of our economy and crucial to economic growth, providing the vast majority of new jobs each year. But American companies -- especially smaller firms -- are being crushed by incessantly rising healthcare costs. Small business owners want to do right by their employees, but insurers continue to jack up premiums by 20, 30, or 40% a year. This has left millions of businesses with no other choice than to drop coverage, curtail hiring and postpone expansions in order to deal with these staggering costs.
As you know, the President recently signed The Patient Protection and Affordable Care Act into law. One of the first provisions to take effect is a major small businesses healthcare tax cut to help small firms cover the cost of providing health insurance for their employees. Small businesses are not required to offer coverage, but an estimated 60% of American companies will be eligible for these financial incentives if they choose to. The $40 billion in tax cuts kick in this year and will help small businesses offset up to 50% of what it costs them to cover their employees.
Joe Frederick from Doylestown could have used this help. He owned a construction company that employed six people but after seeing his premium costs go through the roof, Joe had to drop coverage and eventually lay people off. Joe would have received a tax credit worth $20,000 to offset the $40,000 he paid each year to cover his workers.
Small businesses also deserve a level playing field when purchasing insurance and reform will provide that. For years, they have paid almost 20% more in premiums and double the deductibles that large firms pay for the same benefit packages. Beginning in 2014, small businesses can band together to purchase insurance through state-based insurance exchanges. By joining a large pool and gaining greater purchasing power, small businesses will have access to the same types of affordable and quality coverage that only large firms have today. Small business employers will be able to do one-stop comparison shopping for an affordable insurance plan that offers:
- Lower rates that currently only large groups and firms get,
- Stable pricing from year to year,
- Lower administrative costs, and
- A choice of quality plans.
Insurance companies are going to have to offer small businesses plans with the same benefits and advantages that they offer to larger companies. Under reform, plans could no longer:
- Deny coverage based on pre-existing conditions,
- Selectively refuse to renew coverage,
- Charge different premiums based on gender, occupation, or pre-existing conditions, or
- Set unreasonable out-of-pocket spending limits that drive families deep into debt.
The bottom line is that thriving small businesses are key to our economic recovery. But for decades, spiraling healthcare costs have placed a drag on their ability to expand or hire new workers. The changes under reform help ensure that small businesses can afford to cover their workers if they choose to do so and ensures that they get the same deals as their larger competitors.
To learn more and to see if your business qualifies, please contact Laura Andrews at my Bristol office at (215) 826-1963. To stay informed of my work, or to sign up for my electronic newsletters, please visit my website at http://patrickmurphy.house.gov. Also, please do not hesitate to contact me if I can help in any way. You can contact my Washington office at (202) 225-4276 or my home offices in Bristol at (215) 826-1963 or in Doylestown at (215) 348-1194.