Women small business owners really need healthcare reform

August 4, 2009

– Nancy Duff Campbell is a founder and co-president of the National Women’s Law Center, one of the nation’s pre-eminent women’s rights organizations. A recognized expert on women’s law and public policy issues, for over thirty-five years Ms. Campbell has participated in the development and implementation of key legislative initiatives and litigation protecting women’s rights, with a particular emphasis on issues affecting low income women and their families. The views expressed are her own. —

Insurance companies and others who profit from our broken health care system are mobilizing to defeat comprehensive reform by using misinformation and scare tactics. A prime example is the allegation that healthcare legislation – specifically the plan being considered by the House of Representatives – will hurt small businesses.

The fact is that small business owners, especially women, are already hurting under our current healthcare system. Leah Daniels, 29, is the owner of Hill’s Kitchen – a gourmet kitchenware store that opened last May not far from the U.S. Capitol. Daniels can’t afford to offer health insurance to her three employees. She purchased her own bare-bones plan on the individual market for protection “in case I get hit by a car,” but not much else. It costs her just under $200 a month and doesn’t cover such services as routine doctor’s visits or maternity care. Daniels, who often works 7 days a week, says that she is constantly worried about getting sick.

Daniels’ problems are, unfortunately, all too typical. A new report by the Council of Economic Advisers (CEA) found that small businesses pay up to 18 percent more than large firms for the same health insurance policy. These higher costs mean that small businesses are considerably less likely than larger businesses to provide health insurance to their employees, and those that do tend to have less comprehensive plans. And Census data show that women-owned businesses are generally smaller than male-owned businesses.

Small business owners and employees who don’t get coverage at work or through a spouse’s plan may shop for insurance individually. But if they are women – and small businesses that don’t offer health coverage tend to have large proportions of female workers – they are likely to face discrimination in the individual health insurance market. A study by the National Women’s Law Center found that insurance companies routinely charge women higher rates than men for individual policies and offer policies that exclude health needs specific to women, such as maternity care.

Women who own a small business know that the current health care system is failing them. At a meeting of women small business owners in May, Daniels says, “We went around the room and everyone either had health insurance through their spouse or didn’t have coverage at all. Women talked about being afraid to go to the doctor because they didn’t want to find out that they might be sick. It was really striking.”

The healthcare reform plans that have begun moving through Congress would help make it possible for small business owners to offer comprehensive, affordable health insurance. The House plan would make insurance more affordable by prohibiting insurance companies from discriminating on the basis of health status or gender and by allowing small businesses to purchase coverage through a new Health Insurance Exchange. The Exchange would reduce administrative costs and offer a choice of plans meeting minimum benefit standards. New tax credits would be available to help some small businesses pay for employee health coverage; the credit would be worth 50 percent of the cost of qualified health coverage expenses for businesses with 10 or fewer employees and average wages of $20,000 or less. It would gradually be reduced until firms reached 25 or more employees or average wages of $40,000 or more.

If some employers still can’t provide coverage, their employees could purchase insurance directly from the Exchange. Sliding scale subsidies would help make it affordable, and they couldn’t be turned down because of pre-existing conditions or charged more because of their gender or health history. Larger employers who fail to offer health care coverage would be required to pay an additional payroll tax, but under the plan being developed by the House, businesses below a certain size would be exempt. One version would exempt businesses with payrolls of $500,000 or less. Another would set the exemption at $250,000 – but even at this level, 76 percent of all firms would be exempt.

Opponents of healthcare reform have claimed that small businesses would be hurt by another provision: a graduated surcharge on the very wealthy to help finance health care reform. But the surcharge would only apply to households with adjusted gross income above $350,000 ($280,000 for an individual). As a result, only the wealthiest 1.2 percent of taxpayers – and only 4 to 5 percent of all tax payers with business income – would be subject to the surcharge. Women-owned businesses are especially unlikely to be affected by the surcharge. According to the latest Census data, 96.3 percent of women-owned businesses, compared to 88.9 percent of male-owned businesses, had total receipts below $500,000 – meaning that profits would be well below that level.

Those who claim that healthcare reform will hurt small businesses should re-examine their facts – and the rest of us should examine who they’re really speaking for. We can’t afford to wait any longer for meaningful reform that will bring a guarantee of quality, affordable comprehensive health care for us all.

56 comments

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Please consider this. I own a small business. I have a daughter with a heart defect, so carrying good health coverage has never been optional for us! We pay 100% of full time employee coverage. It costs us roughly 4% of payroll because we negotiate and shop to get the best coverage for our groups’ needs at the best price. (The coverage is through a major carrier.)From what I’ve seen of the proposed bill, my carrier will be required to include coverage at government-defined levels and meet many specifically legislated requirements in order to qualify. These may or may not be benefitial to our groups’ specific needs. In case you haven’t read between the lines, I can expect large increases in premium to meet gov requirements. If I can’t afford that, I will have to pay an 8% payroll tax – doubling my cost. Worse, as I understand it, this will leave my employees and my family needing to purchase coverage. So, our costs will have doubled, but we’ll get nothing.Now, let’s consider the large employer. Most are already paying well over 8% for coverage, so it’s better for them to dump the private coverage and take the difference as profit.No doubt, we need some help controlling skyrocketing health care costs. But, insurance reform does not address the problem. Insurance is not the root cause of skyrocketing costs.

Posted by Kimberley | Report as abusive

Kirk — I’m not sure where I quoted you, unless you are referring to the comment about the proposed plan offering more choice. Your comment (and here I do quote) was: “The proposals offer more choice to individuals and small businesses, not less.”Again, surely you cannot believe this.Now, about HSAs and HDHPs. An HSA IS a High Deductible Healh Plan. That’s the reason premiums are lower. You stated earlier that you own a small business and cannot afford to offer health insurance to your employees. If you don’t mind my asking, can you provide some information about what type of business you own, how long have you been in business, how many employees? It would help me understand where you are coming from in your avid defense of the proposed plans.The reason I am asking is that I don’t know of a single small business owner who supports this bill. I’m not saying there aren’t any, but I would wager those who do have not read the section of the bill titled “Subtitle B – Employer Responsibility” beginning on page 143 and going on for about 50 pages (at least 20 pages of which are devoted to describing penalties for noncompliance). There is no way I could comply with this without hiring an additional administrative person.BTW, I own a software company based in Austin, Texas. We have 30 employees and have been in business since 1991. We switched to an HSA plan when they first came out (MSA at the time).

Posted by Pat | Report as abusive

Just because the plan currently running through congress at the speed of light is the only plan being talked about doesn’t mean we all have to jump on the bandwagon. Healthcare reform does NOT have to mean a government run healthcare plan. Changes in our system can reduce costs and increase the number of insured. There is no need to spend billions of dollars on something so unnecessary. Small businesses are the largest employer base in the United States, and they are also the main reason why people go uninsured. It is almost impossible for a small business to get a reasonably priced health insurance plan for their employees. Federal regulations keep the cost high for these business owners, and at a time like this, we need to be helping out small businesses as much as we can. They should be able to band together across state lines to spread risk and increase bargaining power and purchase individually owned plans, like health savings accounts, for their employees using pre tax dollars. These changes could drastically reduce costs, and are still a viable option for the federal government to pursue. At the NCPA, we are working hard to make sure that the private sector does not get drowned out by government intervention! http://www.familyissues.ncpa.orgCongress and the Obama Administration are pushing for health care reform that will move the US health care system closer to that of Canada or the UK. You can help stop a government takeover of health care from happening. Send a message to the White House and Congress by signing the “Free Our Health Care Now” petition. Go to http://www.freeourhealthcarenow.com and sign the petition today!

Posted by Terry Neese | Report as abusive

Pat, an HSA is not an HDHP. Period. Having an HDHP is a requirement of HSAs, but they are two different, yet related things. You are probably confused because you can have the same company provide your HDHP and administer your HSA. It sounds like that is exactly what you are doing. I do believe that is how most HSA’s are handled.The U.S. Treasury department provides information regarding HSAs, the easiest way to get the information is to Google “All about HSA” go to the first Treasury Department link and read the “All about HSAs” document. The document will state of page 2, “HSAs are used *in conjunction* with a “High Deductible Health Plan” (HDHP).” They are two separate things. The document goes into more detail later.Pat, I have asked you to provide information in regards to your claim that HSAs will be eliminated. That is a claim that you have made. I see nothing that supports this. I am aware that this misinformation is being repeated on sites that are ideologically opposed to health care reform. However, none of the sites I have seen actually provide any basis to their claim. They simply state it. Please provide the basis for the claim from a reputable site. I believe you will not be able to do this, because this is simply more misinformation.You say that I stated earlier that I own a small business. I have not stated that anywhere. My comments are right on this site. Please read them as you are misrepresenting them.Now, the problem with the health care issue is that it is very easy to simply state misinformation. It is a lot of work to state accurate facts and back them up. Look at my comment here. This is a long comment. Too long. That is because I’ve had to back up my facts. I hope that people that read the comments will be wary of very simple statements and will instead use the statements to research the facts. Google is a great tool for this. Don’t trust me or anyone else. Look up the facts for yourself.A case in point is Terry’s comment of a government run health plan. This blog entry is about the current proposals from the House of Representatives and the White House. None of these proposals force anyone into a government run health plan. None of these proposals get rid of private insurance. If you are insured today, you can keep the insurance you have. It’s that simple. If you are not insured, you can choose from private insurance offered on an exchange or a public plan. It’s your choice. You have more choices under the current proposals.You can Google “Health Reform” and look up the information on various government sites to see the facts of what is being proposed. Please do so.

Posted by Kirk | Report as abusive

The health reform being proposed by the White House will provide tax credits to small businesses for providing health insurance. Health insurance will be more affordable for small businesses under the current health reform proposals. Claims to the contrary are almost always based on misinformation.A crucial part of health reform is the public option which will reduce costs through economy of scale. The more people in a plan, the more efficient and cost effective it is. The public option will have many people in it – by choice. This option will be available to everyone including small businesses, but nobody is forced into the public option.This site contains state by state information about the current proposals:http://www.healthreform.gov/Pl ease be aware that there really is a misinformation campaign going on by opponents of health care reform. So, if there is something bothering you about the reform being proposed, you should look it up yourself and verify if it is true.The misinformation is so bad that we have people saying to their representatives, “Keep your government hands off my Medicare.” Google the quote. For anybody who might not know this, Medicare is a government program.Now, that is some effective misinformation out there.

Posted by Kirk | Report as abusive

Costs have nothing to do with “not enough people being insured” which makes the proposed HR 3200 rather silly when it’s main focus is trying to cover more people with mediocre insurance.Rising costs have much more to do with patented pharmaceuticals which are then being widely and carelessly distributed by some doctors(the real war on drugs should begin here), high priced attorneys for medical malpractice suits, lack of personal responsibility by everyone who wants to be “fixed” once they’ve abused their health for 40 or 60 years and lax government enforcement of existing and potential regulations.

Posted by Kelly | Report as abusive

The following link debunks some of the misinformation about health reform:http://www.whitehouse.gov/reality check/Of particular interest is the topic “Reform will benefit small business – not burden it” which talks about tax credits for small businesses, how small businesses are exempt from the “pay for play” rule and some general information about how small businesses are operating today under our current health system.

Posted by Kirk | Report as abusive

We don’t need the government taking over healthcare – PERIOD! Our government is the worst of the worst when it comes to costs. Every business owner knows this. Right now any person ANYWHERE in the world with a serious disease (AIDs, TB, Cancer, In need of Transplant, etc) will be allowed into the US and receive care FREE. All provisions to stop this has been stripped out by the democrats. Using 000-00-0000 for a valid SS number is allowable and will get you free care. Now we have millions with illnesses that cost millions. And to the medical costs – Housing, food, transportation etc and the costs go up even more. Than our wonderful government says that these people can’t be here with family so in comes aunts, uncles, kids, grandkids and more. This is called Chain-Migration. This is why we have so many un-insuranced now. 74% are immigrants both illegal and legal. There is only so much to go around and americans shouldn’t be shoved to the back of the line. This is what will happen with the bill offered from the House. I personally don’t want seniors denied care so ‘others’ get care.

Posted by Lori | Report as abusive

Lori, there is no government takeover of healthcare. Period. If you have private insurance now, you’ll get to keep that insurance after the reform. If you have no insurance, you’ll be able to get affordable insurance after the reform – private or public, it’s your choice.The health insurance reform the White House is proposing should be a non-controversial issue. All sides of the healthcare debate are represented with these proposals.If you hate the government, then you can go with private insurance. The reforms allow this. In fact, it will be easier and cheaper to do this. There will be an exchange to purchase the insurance from.If you hate insurance companies then you can go with a public plan. The reforms allow this too.I mean seriously, what is all this hysteria about? I am absolutely shocked at how easy it is to rile people up with very obvious misinformation.

Posted by Kirk | Report as abusive

The problem is that many small business with greater than a $500K payroll are operating at near or below breakeven profit…especially in this recession.Tax breaks don’t help if the business is not profitable. The result is that the additional cost burden will cause many of these businesses to fold throwing 30-40 people out of work. I believe that a study of the tax returns of small businesses will confirm my concern.The bottom line is that the business will either have to reduce payroll or cut wages in order to survive.

Posted by Ted Pamperin | Report as abusive

One option you might want to consider is a High Deductible Health Plan, I found some info on the web, Ill share it. Im not very good at posting links as Im not very tech savy….so if the links dont click just copy and paste them into the bar up there at the top. Ill put a couple in here for you though and hopefully it will help.http://www.twitter.com/highdeductib lehttp://highdeductiblehealthplan.blogsp ot.comyoutube.com/user/highdeductiblehea lthalso the website for this one company is http://www.highdeductiblehealthplanstoda y.comtheres plenty of info out there. Good Luck

Posted by Jordan | Report as abusive

Um Ted… Tax credits help even if you have no taxable income. They are credits, not deductions. Please get your facts straight. Health insurance reform would be incredibly good for small businesses under any economic situation.

Posted by Kirk | Report as abusive

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Posted by zararina | Report as abusive

Smart Lipo

The proposed plan discussed above is a much better solution than penalizing businesses that do not offer insurance. I’m a small company with 10 or less employees. Until 3 years ago I paid 100% health insurance coverage. Then I was forced to cut to to 50%. Last year the prices go so high that my employees nor I could afford the benefits at the 50% and we dropped it altogether and that was going through an employee leasing company and getting big company purchasing power. When we tried to get insurance for just our company all but one of us was denied coverage because of the state of our health. Ironically, the one employee that was able to get coverage had a tragic accident and was in a coma in the hospital for a week before dying and the insurance company had to pay those costs and his $25,000 life insurance policy. Sometimes I guess even a sure bet is not such a good thing. The rest of us without insurance are paying or own way and have not yet spent nearly what we would have on premiums alone.

Posted by Johnyc | Report as abusive

i like ur blog,i already bookmarked it.

Obviously the law has been enacted by now. We’ll see if it changes in the courts or through Congress. We’ve found http://www.ceowomensclub.com/articles/Fe male-Entrepreneurs-Reality that this is an important issue for women business owners. The cost and potential fear of getting sick can impact the most successful woman business owner

Posted by wtarken | Report as abusive