Saturday, January 8

Forbes Says "Health Care Reform is Working"

From Forbes via TalkingPointsMemo.

The first statistics are coming in and, to the surprise of a great many, Obamacare might just be working to bring health care to working Americans precisely as promised.

The major health insurance companies around the country are reporting a significant increase in small businesses offering health care benefits to their employees.


Because the tax cut created in the new health care reform law providing small businesses with an incentive to give health benefits to employees is working.

So much for that "Job-Killing" Bill, eh?

Republicans, headed by Deficit Fraud Paul Ryan and the Heritage Foundation have been arguing for months that the the Health Reform Act would cost business and force them to either drop coverage or cut jobs due to their "intrusive employer mandates and taxes".

From the Speakers "Report on ObamaCare".

Evaluating the Small Business Tax Credit
Sections 1421 and 10105 of the health care bills passed by Congress provide for the creation of a tax credit to help small businesses afford the cost of covering their workers. Evidence suggests, however, this tax credit actually has the opposite effect than was intended: it acts as a disincentive to increase wages and hire additional workers. A NFIB analysis determined that the tax credit “will do little to nothing to make purchasing insurance more affordable for small firms”:

 Early estimates by CBO indicated that just 12 percent of small business workers would benefit.

 The credit is very restrictive and requires small business owners to meet three complicated “tests” to qualify for any portion of the credit.

 The credit is only available for a maximum of six years, but according to the actuaries at the Centers for Medicare and Medicaid Services, health care costs will continue to increase well after those six years.

Response to the small business tax credit has been described as “tepid” because “the credit starts to phase out for companies that pay average annual wages of more than $25,000 or employ more than 25 workers. The value of the benefit declines quickly, so many business owners in high-cost states get no tax break, and those elsewhere often say the credit is too small to make much of a difference.”

Well, that's the Republican theory, but what's the reality?

From the LA Times.

Reporting from Gladstone, Mo. — Major insurers around the country are reporting that a growing number of small businesses are signing up to give their workers health benefits, a sign of potential progress for the nation's battered healthcare system.

The increase, although not universal, has brought new security to thousands of workers, many of whom did not have insurance or were at risk of losing it.

An important selling point has been a tax credit that the nation's new healthcare law provides to companies with fewer than 25 employees and moderate-to-low pay scales to help offset the cost of providing benefits. The tax credit is one of the first few provisions to kick in; much of the law rolls out over the next few years.


For insurers, the market presents a big opportunity. Nationally, three-quarters of businesses with 10 to 24 workers offer benefits. About half of those with three to nine employees provide health plans. By comparison, 99% of firms with more than 200 employees offer benefits.

Now some insurers are reporting significant jumps in coverage


Despite Republican's sticking their fingers in their ears and going "LALALaaaaa" the truth is that millions of small businesses are eligible for this credit, in fact as many as 400,000 of them in California alone.

Garnering little to no press attention when released in July, a report undertaken by Families USA and the Small Business Majority found that 80 percent of California’s small businesses with 25 or fewer employees will qualify for federal tax credits under the Patient Protection and Affordable Care Act starting this year. This means that of the state’s 571,200 small businesses, 465,500 are eligible for the tax credits in 2010. Of those, 30 percent – or 135,900 – qualify for the maximum tax credit amount.

This credit currently offsets 35% of the cost of Healthcare for these small businesses, and in 2014 the credit increases to 50% of the their costs.

And you know what happens as more and more small business begin to offer health insurance? The overall costs begin to go down. Back to the Times.

For Bistro Kids, a small business in the Kansas City suburb of Gladstone that serves school meals made with locally grown, organic produce, the deal was too good to pass up.


Like other small-business owners nationwide, Firquain had been keeping a file of health insurance quotes. But every year, the prices seemed to get more out of reach. "It just wasn't realistic," she said.

Now, Firquain is offering her 10 chefs a standard individual preferred provider organization plan with a $1,000 deductible and $30 co-pays. The employees pay $67 to $212 a month, depending on age and gender.

Back to Forbes:

The next argument has been that the PPACA is a job killer.

If these small businesses found the new law to be so onerous, why have so many of them voluntarily taken advantage of the benefits provided in the law to give their employees these benefits? They were not mandated to do so. And to the extent that the coming mandate obligations might figure into their thinking, would you not imagine they would wait until 2014 to make a move as the rules do not go into effect until that time?

Of course, there is the nagging banter as to how Obamacare is leading us down the road to socialism.

Let it go, folks.

Private market insurance companies are experiencing significant growth because of a tax break provided by the PPACA. I may have missed the day this was discussed in economics class, but I’m pretty sure this is not a socialistic result of federal legislation.

This certainly doesn't address every issue and concern brought up by reform, and there are still significant complaints coming larges businesses with low-income employees who have limited and weak insurance options such as McDonald's and Jack-in-the-Box who are mandated to provide 'quality' healthcare if they have 50 employees or more, or else pay a $2,000 per employee penalty. Of course the Obama Administration is offering waivers to many of these companies to prevent them from cutting their workforce or dropping covering until the Insurance Exchange come online with tax credits and subsidies similar to what these small business already have and begin to offer less costly choices for those companies, but that time may come far sooner if more and more small business begin to sign up for insurance and begin to further spread the risk pool and share costs.


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