In a move that highlights the politics of stupidity, leaders of the house announced a health care plan that will force the smallest employers to provide health care or pay a tax. According to an article in the WSJ, “Under the House measure, employers with payrolls exceeding $400,000 a year would have to provide health insurance or pay the 8% penalty. Employers with payrolls between $250,000 and $400,000 a year would pay a smaller penalty, and those less than $250,000 would be exempt. Certain small firms would get tax credits to help buy coverage.”
Read the article by Janet Adamy and Laura Meckler (reg required). BTW, the WSJ just ran an article on the rising costs of health care and how it is already causing major problems for small business and entrepreneurs. In that piece from a July 13th special report, Simona Covel writes
At some businesses, in fact, health care is the highest expense after salaries—with devastating consequences. Owners must skimp on vital investments like marketing and research. Some can’t hire the people they want because top candidates demand premium coverage. Or they end up understaffed because of the high cost of insurance—and lose potential clients as a result.
At the same time, to keep costs in check, countless companies are slashing coverage or dropping it entirely. Some are turning to freelancers or offshore workers instead of hiring full-timers and locals. And some would-be entrepreneurs find insurance so onerous that they’re not even starting a business in the first place.
What’s more, it isn’t just individual companies at risk. It’s the entire economy. Historically, small businesses have boosted recoveries significantly. Since they can’t simply make mass layoffs and hunker down, as so many big companies do, they must take risks to survive—like investing in innovative ideas and hiring more workers to implement them. But stratospheric health-care costs threaten to damp that enthusiasm and choke off investment.
“We have got to figure out how to get an affordable [insurance] package to people who would be entrepreneurs,” says Carl Schramm, president and chief executive of the Ewing Marion Kauffman Foundation, a pro-entrepreneurship organization in Kansas City, Mo. If such a package existed, he adds, “the chances of a more robust recovery at the hands of entrepreneurs would decidedly be higher.”
As an entrepreneur with a new venture (roughly 18 months old), my partner and I have not taken on any employees and with policies like this coming down the pike, we are likely to continue to outsource and pay contractors. Image if they cap and trade our computers, etc?