WASHINGTON - The following op-ed by United States Senate Committee on Small Business and Entrepreneurship Chair, Mary L. Landrieu, D-La., was published in The Advertiser in Lafayette, La., The Shreveport Times in Shreveport, La., and The News Star in Monroe, La. Newspapers and online news sites are invited to reprint it:
"Health Care Small Businesses Can Afford"
By: Senator Mary L. Landrieu
Louise Brown, owner of Bayou Café and Catering in Baton Rouge, wants to provide her 10 employees with health insurance. But with costs as high as $650 a month per employee, even if Louise paid half the cost, most employees would not be able to pay their portion.
Sixty-four percent of small-business owners in Louisiana do not provide coverage. Most say it is too expensive.
Premiums are high because of a lack of competition. In Louisiana, the top two health insurance companies maintain 74 percent of the market. In this environment, large businesses are offered better rates and more choices because they have a larger group to spread risk and more negotiating power.
Without reform, small-business owners in Louisiana will go from spending $1.7 billion on health care in 2008 to more than $4 billion by 2018, according to Small Business Majority. I have put small businesses’ concerns on record and given them a voice in Congress’ health-care debate.
To give small businesses the affordable and predictable health insurance choices they deserve, the Senate bill includes:
• Small Group Insurance Exchanges That Work: A robust system of exchanges that pools small businesses together would encourage competition, spread risk and lower costs.
• Market Reforms to Increase the Exchange Pool: Consumer protections and market reforms will ensure that the largest possible pool participates in exchanges, bringing down costs for everyone. The bill also contains an individual responsibility to obtain coverage, rather than an employer mandate to provide coverage. Additionally, insurance companies will not be allowed to deny or rescind coverage based on age, pre-existing conditions or health status. Most importantly, if you like what you have now, you can keep it.
• Small Business Tax Credit to Encourage Participation: Health- care reform must include a small-business tax credit to encourage participation in the exchanges, increase the pool size and make insurance more affordable for small business. A small- business tax credit will also free up capital for small-business owners to grow their businesses.
While these reforms are a step in the right direction, I believe health-care legislation in the Senate should go one step further to help small businesses. These changes include:
• Expansion of the Tax Credit: As currently proposed, small businesses that contribute at least half their employees’ health-care costs would receive a tax credit. The full amount of the credit would only be available to employers with 10 or fewer full-time employees with annual wages averaging $20,000 or less. But because the average wage for employees in such firms is more than $30,000, the value of the credit would be cut in half for many small businesses. To be effective, this tax credit needs to be expanded.
• Tax Equity for the Self-Employed: Many small businesses not offering coverage today are owned by the self-employed, who make up 15 percent of Louisiana’s workforce and who have seen their premiums rise 74 percent since 2001. In addition to skyrocketing premiums, self-employed workers cannot deduct premiums as a business expense for payroll tax purposes, which effectively results in 15.3 percent of additional tax on health insurance premiums for the self-employed. This needs to change.
Because I am hopeful we can make progress on each of these concerns, and others, I voted to allow debate on the Senate bill. This, however, is not an indication of how I might vote on the final bill. Moving forward, we must ensure small businesses and all Americans receive the relief they need and deserve through the right, bipartisan, reforms.
Senator Mary Landrieu, D-La., is the Chair of the Senate Committee on Small Business and Entrepreneurship.