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I recently heard from a small business owner from New Jersey who wrote that he employs eight people and provides health insurance for all of them. But his policy goes up at least 20 percent each year, and today, it costs almost $1,400 per family per month — his highest business expense besides his employees’ salaries. He’s already had to let two of them go, and he may be forced to eliminate health insurance altogether.
He wrote, simply: “I am not looking for free health care, I would just like to get my premiums reduced enough to be able to afford it.”
Day after day, I hear from people just like him. Workers worried they may lose their coverage if they become too sick, or lose their job, or change jobs. Families who fear they may not be able to get insurance, or change insurance, if someone in their family has a pre-existing condition. And small business owners trying to make a living and do right by the people they employ.
These are the mom and pop stores and restaurants, beauty shops and construction companies that support families and sustain communities. They’re the tiny startups with big ideas, hoping to become the next Google or Apple or HP. And, as shown in a new report released today by the White House Council of Economic Advisers, right now they are getting crushed by skyrocketing health care costs.
Because they lack the bargaining power that large businesses have and face higher administrative costs per person, small businesses pay up to 18 percent more for the very same health insurance plans — costs that eat into their profits and get passed on to their employees.
As a result, small businesses are much less likely to offer health insurance. Those that do tend to have less generous plans. In a recent survey, one third of small businesses reported cutting benefits. Many have dropped coverage altogether. And many have shed jobs, or shut their doors entirely.
This is unsustainable, it’s unacceptable, and it’s going to change when I sign health insurance reform into law.
Under the reform plans in Congress, small businesses will be able to purchase health insurance through an “insurance exchange,” a marketplace where they can compare the price, quality and services of a wide variety of plans, many of which will provide better coverage at lower costs than the plans they have now. They can then pick the one that works best for them and their employees.
Small businesses that choose to insure their employees will also receive a tax credit to help them pay for it. If a small business chooses not to provide coverage, its employees can purchase high quality, affordable coverage through the insurance exchange on their own. Low-income workers — folks who are more likely to be working at small businesses — will qualify for a subsidy to help them cover the costs.