By FRANK KNAPP JR. – Guest Columnist, The State
Published April 6, 2010
I wasn’t planning on responding to Henry McMaster’s Thursday guest column about why he is suing the federal government over health care reform. After all, he is the state’s attorney general, and I’m not a constitutional attorney. Heck, I’m not even a lawyer.
However at the end of his column, Mr. McMaster strayed into my area of expertise – small business. So game on.
As the co-founder and president of the S.C. Small Business Chamber of Commerce and the owner of several small businesses, it is important for me to correct misinformation Mr. McMaster is offering about the new health insurance reform law.
Mr. McMaster misleads the reader when he writes that small businesses “will be unable to bear the financial pressure” of health insurance reform and “many would be forced to lay off employees or even go out of business.” He calls the reform a “jobs killer.”
Now, Mr. McMaster is a fine person, and I consider him a friend. But he obviously has been out of touch with real small businesses for too long.
While he and all his employees have generous health care benefits subsidized by our tax dollars, small businesses today are breaking under the “financial pressure” of years of double-digit health insurance premium increases. No one has been helping small businesses with their health insurance costs.
As a result, small businesses continue dropping this employee benefit. Today more than 60 percent of our state’s businesses with fewer than than 50 employees do not offer health insurance primarily because they can’t afford to. Many uninsured small business owners have had to file for bankruptcy and close their businesses because of their own medical bills.
In addition, the high cost of health insurance for a fit person and the refusal to offer health insurance to a person with a pre-existing condition continues to block the creation of small businesses. Would-be entrepreneurs simply can’t afford to strike out on their own to build and grow a business because they are locked out of the health insurance market.
Today’s health insurance system is the real “jobs killer.”
But this situation is about to change. In spite of the false assertions of some of our state’s leaders, the health insurance reform offers hope for affordable health insurance for small businesses.
First, let’s deal with the fear mongering.
About 95 percent of our state’s businesses have 50 or fewer employees and will not be required to offer health insurance or be penalized if they don’t. Of the rest, according to the Kaiser Family Foundation, 97.6 percent already offer health insurance. That leaves fewer than 150 out of our 105,000 businesses in the state that will have to make a decision by 2014 either to take advantage of lower health insurance costs or possibly pay at most $2,000 a year per employee.
Here’s what is really in store for small businesses from health insurance reform.
Starting this year, small businesses with fewer than 25 employees – about 90 percent of our businesses – will be eligible for health insurance tax credits. Many small businesses now will be able to afford health insurance, and those already offering the benefit will save money. Then in 2014, small businesses will be able to obtain health insurance through the newly created health insurance exchange that will leverage very large numbers of people in a pool to drive down premiums of the insurance companies competing for their business.
This year, high-risk pools will receive federal subsidies to bring affordable health insurance to previously uninsured business owners. When the insurance exchanges are in place in 2014, new entrepreneurs no longer will be blocked from starting new businesses by unaffordable health insurance.
All this with no new taxes on small businesses unless they are offering exceptionally high health insurance benefits.
Mr. McMaster might find political advantage in challenging the constitutionality of health insurance. But he should base his efforts on the law and not misrepresenting the components of the reform that will help our small businesses.
Mr. Knapp is the president and CEO of the S.C. Small Business Chamber of Commerce, www.scsbc.org.