Friday, March 5, 2010

NFIB's Q&A about the president's health care plan

Recently the National Federation of Independent Businesses issued an article in a question and answer format about the president's recent plan for health care reform. In it, they claim that the president did not put out all of the information about the cost to businesses.

Neither did the NFIB.

They disparage the plan to penalize businesses $2,000 per employee if health insurance is not offered. What they failed to say was that the majority of companies pay more than $2,000 to provide health insurance for their employees. Depending on the type of health insurance (traditional $500 deductible or Health Savings Account with $2,500 deductible), the average cost of all companies ranged from $3,900 to $4,800 in 2009 according to an RJF-Milliman survey of 3,245 companies. (It's much, much higher for family coverage plans.) 77% of all companies pay more than $3,800 per year for single coverage, according to a Kaiser Family Foundation survey. Some of these costs are lowered by employee contributions. For single coverage plans, employees do not contribute much above 25% typically. This still leaves $2,900 or more for the employers to cover. Assuming the employers pay 60% of family coverage, they pay $7,000 or more.

The penalty may affect the 54% of really small companies who don't offer health insurance right now (<9 employees), or the companies that have to discontinue offering it because of the high cost. 72% of companies with less than 25 employees offer health insurance, while 95% of companies with more than 50 employees offer health benefits. All this is according to KaiserFamily Foundation survey of 2,054 companies.

Therefore, a majority of companies--large and small--would experience a reduction in their expenses through the plan if they discontinued offering health insurance and only paid the penalty. Profits would go up. Investment in business improvements could take place. Perhaps employee pay may go up. That would drive consumer spending and get the economy rolling again.

So, NFIB, maybe the president's plan is actually good for business.

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