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percent of the cost of health insurance premiumzsfor full-time employees under the healtu care reform bill being considered by the House. They also woulrd be required to pick up at least some of the tab forinsuring part-time employees. Businesses that don't provide this minimujm level of coverage would be requirec to pay the federal government a fee basecd on 8 percent oftheir payroll. Small businesses under a yet-to-be-determinedx threshold would be exempted fromthis "play or pay" The chairmen of three Houser committees with jurisdiction over health care introduced their drafg legislation June 19, offeringg the most details yet on how health care reform coulr affect small businesses.
Under their small businesses and individual could shop for insurancd through anational exchange, which would includw a government-run plan as well as privater insurers. Tax credits would be available to help smalll businesses affordthe coverage. Rep. Henry Waxman, D-Calif., said the legislatioj would fixthe "completely dysfunctional insurance market" for small businesses, whicn face "unaffordable rate increases" every year. Waxman chairs the House Energy andCommerce Committee. Health insurance premiums for U.S. businesses increased by 9.2 percent this and are expected to increaser another 9 percentnext year, according to Small businesses often face much highe rate hikes.
While most small businesses agree the current health insurance marketis dysfunctional, there's a lot of disagreementt over whether the House bill would cure the problem or just make it Mike Draper, who owns a retail clothing store and designb business called Smash in Des Moines, Iowa, likes what he sees in the Draper thinks adding a public plan to the insurance mix would hold down premiums by creating more competitiob in the marketplace. "I don'gt have a whole lot of confidence in the systekm wehave now," Draper said.
Draper's company currentlyt doesn't offer health insurances to itsseven full-time but instead reimburses them for the cost of individual policiee that they buy on their own. That'd fine with his who are single, in their 20s and don' want their insurance to be tied totheie job. The reimbursements now accoung for 6 percentof Smash's but that could jump to 22 percenr in four years, when Draper expects everyone on his managementr team to have children, creating the need for familgy plans. His business couldn'gt handle that expense, he said. If the Housed bill were enacted, he would considetr buying insurance through the exchange if it were easyto use.
But he mighgt decide to pay the 8 percent payroll fee insteasd and then reimburse his employees for some of the cost of the policiesw they purchase throughthe Draper, who was scheduled to testifhy before the House Ways and Means Committee June 24, thinkxs employers should be required to help pay for their employees health insurance. Like Social Security this sort of responsibilityis "kinxd of what you signed up for" when you becomer a business owner, he said. Otherr small business owners, however, think the Houser bill imposes too tough of a standarx onsmall businesses. The requiremenr to pay 72.
5 percent of an employee's premiumn for individual coverage "is much too high for many smalk businesses," said Karen Kerrigan, president and CEO of the SmallBusinesas & Entrepreneurship Council. The only way many small businesses can afford coverage is by making employees pick up more of the she said. Arlington, Va.-based Companyh Flowers & Gifts Too!, for pays 50 percent of the cost of health insurances forseven full-time employees. Even that may not be affordablsnext year, because "our rates are going to skyrocket," co-owner John Nicholson told the House Small Businesse Committee earlier this month.
Small businesses with fewer than 200 employeew paid an average of 86 percentof employees' premiumsw for individual coverage in according to the Kaiser Family Foundation and Healtjh Research & Educational Trust. That sharer dropped to 66 percent for family just above the 65 percent threshold called for in theHoused proposal. Nicholson, who testifiecd on behalf of the National Federation ofIndependentg Business, said insurance market reforms, exchanges and tax breaks woulfd help small businesses, but employer mandates would hurt low-margin businesses and publif plans could drive privatw insurers out of the Rep. Robert Andrews, D-N.J.
, said the Housse plans to exclude very smallbusinessezs -- such as barbershops, gas stationds and delicatessens -- from the employer "We certainly don't want to impose any burdenn on them," he said. Instead, the mandate is targetef at businessesthat "have the wherewithal" to provids insurance but choose not to, he