More Costs for Small Business
Well, the House went public with their new healthcare bill this morning. Here are just a few highlights that might interest small business:
—House Majority Leader, Steny Hoyer (D-Md) said, “We will keep our promises and commitment to the integrity of the process by making the bill’s full text, to make sure we have this exactly right, publicly available for 72 hours before the members are asked to vote.” 72 hours—to read, study and analyze a 1,990-page bill from the House of Representatives …before they vote to make it a version of a law. I guess they expect Washington to shut down for 72 hours while everyone analyzes the bill.
“This report, by its very length, defends itself against being read.” —Winston Churchill
—The bill apparently does take a pretty good whack at both the health insurance industry and the pharmaceutical industry. This will certainly shift the people on K Street into high gear.
—More small businesses will be exempted from the mandate to provide health insurance to employees—those with payrolls up to $500,000. This is good news for small business, as the prior House bill capped the exemption at $250,000.
—The cost of the bill will be paid in part by taxing individuals with incomes over $500,000, and families with incomes over $1 Million. First, it is not too difficult for many people in this group to manage their incomes down below the threshold. Second, even if the tax was exorbitant, there are not enough people, technically, in this group to make a major dent in the cost of the new bill.
—The rest of the cost of this new bill is expected to be made up from savings in Medicare. The Seniors are not going to like this part. Doctors today are dropping Medicare patients in droves, because Medicare payments are so low, any doctor treating Medicare patients could likely make more money being a plumber or an electrician.
For a complete copy of this new (1,990-page) bill, click here (Huffington Post—4th paragraph). I’m sure you can have it properly read and analyzed before Sunday, November 1st, at 10:a.m. (72 hours from release).
The good news for small businesses may be short-lived, however, because there is a problem with the government’s math. The Congressional Budget Office pegs the cost of this healthcare bill at something north of $1 Trillion for the next 10 years. Be that as it may, I previously posted an analysis of projected healthcare costs, for the additional insured only, that totaled $2.6 Trillion over 10 years…check it out here. This analysis assumed that every person brought into the new program would receive care at least as good as the Veterans Health Administration (VHA) provides.
On the other hand, there are two options to my analysis; (1) reduce the quality of healthcare way below the VHA standard to bring the costs in line with the budget estimates, or (2) increase taxes to pay for the costs above the budget estimates.
Savings? The administration is saying there are savings to be gained by streamlining healthcare—Forget it! Here is what President Obama’s healthcare czar and major healthcare advisor, Dr. Ezekiel Emanuel, had to say about healthcare savings:
“Vague promises of savings from cutting waste, enhancing prevention and wellness, installing electronic medical records and improving quality are merely ‘lipstick’ cost control, more for show and public relations than for true change.” (Dr. Ezekiel Emanuel, Health Affairs, February 27, 2008)
So…small-business folks; as you update your long-range business plan, be sure to include an ever-increasing expense for health insurance for you and your employees. There are not enough wealthy people in the U.S. to pick up the $2.6 Trillion tab, and any savings being talked about is only cosmetic. Yet, the money to pay for everything must come from somewhere—most likely; you, me, and our small businesses.
Back to Work
The inauguration is over and President Obama started his new job today. Pundits galore have emphasized the tremendous challenges he is facing, so we are all aware that he has a big job ahead of him. In his approach to some of his tasks, I heard (then) President-elect Obama say, a few days ago, that he wanted to retain certain tax cuts to help small businesses, because “…they are the backbone of our economy.” I like that—our President understands what makes our economy run and where recovery and future prosperity will come from. That’s the way it has been in prior recoveries, and that is the way it will be in this one. Now is not the time to raise taxes on small business.
Unfortunately, the President must deal with a recalcitrant Congress, and Congressional leadership that promote their own agenda. Nancy Pelosi clashed with President Obama’s stand for small business even before he took the oath of office. She made it clear that she wanted to raise taxes now, not reduce them. I am afraid that President Obama’s job will not be to lead an august group of Congressional members to implement well thought-out plans for recovery—his work will be more like (as I’ve said before) “herding cats through a forest.”
If, for a moment, you can visualize the process of “herding cats”, you will quickly realize that the job will take a lot of herders. That’s where we can (and must) be of help to the President. I think it is the responsibility of every small business owner to tell our elected representatives in Congress, that we (small businesses) are the ones who will lead the economic recovery. Furthermore, that more restrictive rules and regulations (including hampering the normal functions of sound banks), and increased taxes will only make our jobs that much more difficult…and take that much longer.
President Obama “gets it”—why can’t our elected representatives?
My Book
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