Healthcare Reform Ruling Comes Down on the Side of Small Business

John Arensmeyer

John Arensmeyer

The Affordable Care Act was signed into law more than a year ago, but in true democratic fashion the debate about whether it should remain on the books is far from over. Opponents of the law have been waging one court battle after another trying to have it ruled unconstitutional. But on June 29, the 6th Circuit Court of Appeals issued an encouraging ruling: the Affordable Care Act is constitutional.

The ruling is the latest in a handful of court decisions reaffirming the right of Congress to enact the law. The panel of three judges—two of whom were appointed by Republican presidents—determined that Congress had the power to pass the Affordable Care Act under the Commerce Clause of the Constitution. We hope this will put the tired debate over the constitutionality of the new healthcare law to rest because there is a lot in the law that will give small businesses the relief they need from soaring healthcare costs.

The court case focused on the minimum coverage requirement provision of the ACA. This requires everyone in the United States to have some type of health coverage by 2014, whether through a private plan, employer-based health insurance or a public plan like Medicare or Medicaid. The judges agreed with many constitutional law experts on this subject: Congress did not overstep its legal authority when making this requirement.

It’s refreshing to see two judges from different political parties confirm the constitutionality of the minimum coverage requirement. They were able to look past the partisanship that has gripped the national debate on healthcare reform and make a decision based on the law.

Opponents of healthcare reform haven’t been able to defend the merits of their argument because the facts aren’t on their side. They can’t say that the status quo was working because it wasn’t—small business owners and their employees can attest to that. Small businesses have been losing coverage at an alarming rate thanks to the increasing unaffordability of insurance and inaccessibility to plans that fit their needs. The RAND Corporation estimates that the ACA will boost employer health insurance offer rates from 57 to 80 percent because of, among other things, lower premium costs resulting from healthcare exchanges and tax credits. A study we released with Families USA found that more than four million small businesses—87 percent of all small businesses in the country—are eligible for tax credits to help cover the cost of health insurance.

Opponents also claim that the reform measures will add to the national debt and increase government spending, yet the nonpartisan Congressional Budget Office’s analysis found that the ACA will reduce the federal deficit by $143 billion by 2020 and by another $1 billion the following decade. This is an important point to consider as lawmakers debate whether to raise the nation’s debt limit. The Affordable Care Act will improve our nation’s fiscal woes by taking direct aim at rising costs across the entire healthcare system and making the reforms necessary to reduce waste, fraud and abuse and improve the effectiveness of every dollar we spend.

Most importantly, opponents’ efforts to thwart the law won’t make the situation any better for small businesses and the millions they employ. Striking down the law would only make things worse; health premiums would continue to increase at exponential rates and more and more individuals would be left uninsured. It was reassuring Wednesday to see fair and impartial judges stand on the side of reason and ensure that won’t happen any time soon.

Community Development Loan Funds Can Help Small Businesses

John Arensmeyer

John Arensmeyer

In this tough economy, small employers are struggling to get access to the capital they need just to stay in business, let alone expand and give our economy the boost it needs. Small businesses are the nation’s job generators. Their inability to grow isn’t helping our recovery, it’s stalling it.

Fortunately, there are a variety of resources that can help entrepreneurs overcome this hurdle. The Treasury Department is teaching banks and community development loan funds—nonprofit organizations that borrow money from multiple sources and lend it to small businesses and others—how to secure funding that they can pass to small businesses. Community development loan fund representatives can join a free webinar on Monday, June 20 to learn about the application procedures for receiving funds. For more information, click here. However, the deadline for these organizations to apply for federal funding is Wednesday June 22, and we hope they take advantage of this great opportunity before it’s too late.

Since the financial collapse of 2008, small businesses have found it difficult, if not impossible, to get loans to keep their companies afloat or expand. Even if they have a perfect credit score, the flow of cash and credit from banks to entrepreneurs has all but disappeared. For example, the government already has a variety of incentives for small firms to purchase and install energy-efficient equipment or retrofit their buildings, and they provide tax credits for those who hire workers. However, many small businesses don’t have the available funds necessary to cover the initial costs. It’s these reasons and more that plant lending, specifically the lack of it, at the top of small businesses’ list of concerns.

It’s encouraging the government is taking steps to reach out to banks and other organizations that want to help get small businesses the capital they need to do what they do best—grow our economy and create jobs.

Small Business Strategy: Health Insurance Helps Boost Bottom Lines

John Arensmeyer

John Arensmeyer

Originally featured on the Huffington Post

Most mornings, Michigan small business owner Mark Hodesh meets a group of friends for a cup of Joe at the local coffee shop to shoot the breeze. The conversations are casual and friendly, but as is often the case, talk invariably turns to politics and more than a few mornings over the past year or so have been spent wrangling over the vicissitudes of healthcare reform.

Mark is one of the few members of a group who supports the Affordable Care Act, a stance he explains in a bottom-line oriented way only a small business owner could. Mark provides health insurance to his employees because it makes good business sense, not because he feels like he has a responsibility to do so or because it makes him feel warm and fuzzy inside. He does it because it hones his competitive edge. Offering coverage helps him hire and retain good employees and that, in turn, helps boost his profits.

Many small business owners offer their employees health insurance for the same pragmatic reasons Mark Hodesh does, and support the new healthcare law because it will lower their costs and allow them to keep more of their profits–especially when the law is fully implemented in 2014 and health insurance marketplaces are available for small businesses to buy lower-cost, higher-quality plans. These examples contradict a recent study by McKinsey & Co., which claims there will be a 30 percent drop in employer-sponsored health insurance because of the new law.

When Mark Hodesh — who this year received a $10,000 tax credit thanks to the new law that allowed him to hire a new employee — can purchase health insurance for his employees at an even lower cost, you better believe he’s not going drop the coverage he sees as making his business more competitive.

McKinsey’s report contradicts credible independent analyses, not to mention the real-life experiences in Massachusetts. Healthcare reform in the Bay State is the closest thing to the federal law in effect, and despite similar speculation before its enactment, employer-sponsored health insurance didn’t drop once the law was implemented. It rose. Massachusetts’s law is weaker than the ACA, yet employer-sponsored insurance grew by 100,000 people, according to MIT economist Jonathan Gruber. Nationwide, the impact should be even greater because the ACA offers employers much stronger incentives to provide insurance, such as tax credits.

What’s more, the McKinsey report is an outlier at odds with studies by well-respected groups including RAND Corporation, Urban Institute and the Congressional Budget Office, which found the ACA’s effect to range from an insignificant loss in coverage to a major increase–nothing like the 30 percent drop McKinsey predicts.

Recent media reports have shined a light on the controversial study. Time reporter Kate Pickert asked McKinsey to reveal its methodology and other details about the survey — basic questions that should be asked of any credible poll — and firm representatives refused. A Talking Points Memo report quoted sources close to the poll who claimed McKinsey wasn’t releasing the data because “it would be damaging to them” and that the poll wasn’t conducted using McKinsey’s “typical, meticulous methodology.”

But, contradictory studies and undisclosed methodology aside, the study ignores the current reality: employers have been dropping insurance left and right under the status quo. In 2000, 69 percent of small businesses offered benefits; in 2008, only 63 percent did–a trend sure to accelerate without reform.

The nattering nabobs of negativism will latch onto anything — no matter how questionable — they think bolsters their case against healthcare reform, but the fact remains that the status quo was not working for small businesses. History and the majority of research show the Affordable Care Act will. And that means Mark Hodesh’s employees don’t have to worry about losing their insurance and Mark will be able to keep his competitive advantage, and perhaps score a point or two during his morning political debates.

Healthcare Tax Credits: A Boon To Small Business, Yet Spin-Doctors Oppose

John Arensmeyer

John Arensmeyer

Originally featured on the Huffington Post and AllBusiness.com

Ever since the Affordable Care Act was passed in 2010, opponents have thrown every attack they can think of against the wall, hoping something will stick. As attempts to repeal the law have failed, some of their arguments have become increasing laughable and, unfortunately, unconscionably reckless. For instance, these opponents now want you to believe that, in essence, small business owners do not want free money — a mindboggling claim in these economic times.

Opponents, including groups that claim to represent small business, are taking aim at the small business tax credit in the ACA — a provision allowing businesses with fewer than 25 employees that have average annual wages under $50,000 to get a tax credit of up to 35% of their health insurance costs beginning in tax year 2010. They say small businesses aren’t using the credits because they don’t provide enough of a benefit.

Poppycock.

I’m a small business owner. I founded ACI Interactive, an award-winning international e-commerce company that, after 10 years, I sold to the nation’s leading retirement products company. My current company, Small Business Majority, is a nonpartisan, nonprofit organization that focuses on advocating for small business-friendly policies at the national and state levels. And small business owners like myself have a special name for tax credits: free money.

Politicians and spin-doctors with an ax to grind about healthcare reform argue that my small business colleagues don’t like free money. They say these tax credits, which are available until 2017, have no practical utility. That’s like claiming that people wouldn’t pick up $100 they find on the sidewalk because it’s not enough to cover their rent that month. The argument is simply ridiculous, but even more astounding is that some people, likely far removed from the day-to-day reality of running a small business, seem to think it’s a valid point.

Let me set the record straight. Small businesses like free money, even if it’s available for only a few years or if it comes from a president they don’t agree with. And they especially like it when times are tough.

There is a problem, however: small businesses haven’t been taking advantage of the tax credits — not because they’re turning their noses up at free money, but because they don’t know the credits exist. We polled more than 600 small business owners nationwide and found that 57% weren’t aware the credits were available. After learning of the credits, one-third of small business owners who don’t currently offer insurance to their employees said they’d be more likely to do so because of them.

The IRS sent postcards to the 4 million small businesses eligible for a credit on their 2010 taxes; according to a report we released last year with Families USA, nearly 84% of all small business in the country would be eligible for a credit. But small business people work 80-hour weeks so it’s understandable that they might not know all the details of the healthcare law, especially when those shouting the loudest and purporting to have small businesses’ best interests at heart are actively advocating against the credits. That’s a disgrace and a disservice to our nation’s entrepreneurs who bust their hump every day to make ends meet, pay their employees and turn a profit in their chosen endeavor.

It’s clear partisans in Washington care more about scoring political points than helping small business owners. The fact that they’re waging their ideological war at the expense of our nation’s chief job creators is shameful. Small businesses will help dig us out of this recession. We should be doing everything in our power to help them, no matter what end of the political spectrum we fall on.

New Healthcare Regs Could Unlock Entrepreneurship

John Arensmeyer

John Arensmeyer

Originally featured on the Huffington Post

Before he’d even graduated from college, Arthur Holst knew he was destined to work for a big organization. Not because the corporate culture called to him or because he had an undying love for cubicles, but because at age 19 he had a kidney transplant.

He had to work somewhere that offered good health benefits because that was the only way he was going to get the insurance he needed to survive. Starting his own company and running the risk of being denied insurance because of his health condition was not an option.

“You’re not thinking in terms of taking risks, you’re thinking in terms of the security the job offered through health insurance,” Arthur said.

Many years later, the Pennsylvanian is happy working for the city of Philadelphia, but he would have preferred to have the option of striking out on his own and starting a business — something he could have done if the Pre-Existing Condition Insurance Plan (PCIP) program enacted under federal healthcare reform had been in place.

These plans allow individuals with a preexisting condition to obtain health insurance if they’re denied coverage. On Tuesday, the Department of Health and Human Services beefed up the program to make it more affordable and easier to participate in. And although it’s too little too late for Arthur, there are many people out there just like him who will now have the option to see where their entrepreneurial spirit takes them.

The PCIP program is run by the Department of Health and Human Services in 17 states and by state governments in the rest. Thanks to the regulations issued on Tuesday, premiums in the states where the federal government administers the plans will drop, some by as much as 40 percent, and eligibility requirements will become less stringent. Instead of requiring applicants to submit rejection letters from insurance companies to prove their eligibility, they can now use a doctor’s note to verify their status.

America prides itself on being the land of entrepreneurialism, yet the act of denying people coverage for a preexisting condition discourages that tradition. When someone has a great idea or invention and wants to start a new business, but is forced to stay in their current job to keep health benefits, the potential for a new business flies out the window. This scenario, often referred to as “job lock,” costs our economy startup opportunities and job growth.

Small business owners Marsha and Russell Geist, owners of Metropolitan Landscape Management in Dayton, MD, would have found themselves in exactly this situation if Maryland hadn’t been ahead of the curve when it comes to preexisting condition bans. Both Marsha and Russell worked for the federal government while they were starting their landscape business, but were able to quit their government jobs and focus full-time on their start-up. However, Russell had medical issues, including a benign brain tumor, which landed him in the preexisting condition group. If Maryland hadn’t banned denying coverage based on preexisting conditions in the 1990s, Marsha would have had no choice but to continue working for the government to maintain their insurance instead of joining her husband.

“It would have directly affected the growth of our business,” Marsha said. “Maryland was very proactive in making that change.”

Small business employees are also the frequent victims of coverage denial based on preexisting conditions. Small business owner Rick Poore, proprietor of Shirts 101 in Lincoln, NE, spent a tremendous amount of time trying to get one of his 29 employees who suffered from pancreatitis onto his company’s group plan. If Rick had put the employee on the group plan, the costs would have skyrocketed, and it was likely the carrier would drop them altogether. Eventually, Rick was able to get his worker on the company plan without breaking the bank, but it was time and money that Rick could have spent running his business instead of jumping through one insurance hoop after another.

The Department of Health and Human Services made the right decision to lower premium costs and make it easier for people to join these much-needed programs. These new regulations will make it easier for employees like Rick’s and would-be entrepreneurs like Arthur to get the coverage they need while working in the jobs they love.