Fix Health Care without Hurting Job Creation

The U.S. Senate could begin debate on health care reform legislation next week. There's little argument that health care costs growing at three times the rate of inflation are straining family budgets and hampering small business -- the bedrock of our economy -- from expanding and creating jobs. Congress should move to enact legislation that addresses rising health care costs without getting in the way of job creation. 

Unfortunately, the bills moving through Congress do little, if anything, to address health care costs.  In addition, pending legislation fails to alleviate the burden on small businesses.  In fact, the 5.4 percent surtax in the health care bill passed by the House of Representatives would make things worse by increasing the marginal and capital gains tax rates.  One-third of this $460.5 billion tax increase would be paid by small business, along with costly new health insurance mandates that disproportionately hurt small business. The non-partisan Congressional Budget Office says small businesses could face higher insurance premiums.  Outside experts have predicted increases as high as 20 percent. The CBO also concluded that the Senate Finance Committee legislation could force about 3 million people out of employer-based coverage.  That doesn’t even count the potential impact of a government-run plan.

In addition, the House bill and the Senate health committee bill would tax small businesses for not offering health care coverage.  In the House bill, this fine is a $135 billion tax increases, and the vast majority of this would be paid by small business.

These tax increases in the pending health care reform legislation are on top of the tax increase proposals on small business contained in the budgets proposed by the President and passed by the Democratic leadership in Congress.  If the House surtax is enacted, coupled with the increase in the tax rates in the Democratic budget, the top rate for small business will be increased from 35 percent to 46.4 percent.  This is a tax hike of 33 percent on small business.

With unemployment having reached 10.2 percent, it doesn't make sense to get in the way of job creation.  Seventy percent of new jobs are created by small business.  Yet, rather than helping alleviate the crippling affect that rising health care cost having on this important sector of the economy, current health care reform legislation delivers a serious blow to Main Street, America. Instead of putting displaced workers back into the workforce, higher premiums, new mandates and higher taxes would force small businesses to cut jobs and lower wages. Instead of helping to rebuild the economy, this legislation would increase unemployment and add to the deficit, further inhibiting economic recovery.  When you've got a 10.2 percent hole, you should stop digging it deeper with tax hikes on the engine of job creation, which is small business.

After the House of Representatives passed its bill almost a week ago, the National Federation of Small Business said this, “Small business owners are outraged … this bill will actually make things worse, not better.  With unemployment at a 26-year high, the punitive employer mandates and atrocious new taxes will force small business owners to eliminate jobs and freeze expansion plans at a time when our nation's economy needs small business to thrive.”

Congress needs to address health care. We need to bring down costs, improve quality and increase competition in the health insurance market place. But it needs to be done in a way that makes our economy stronger.  America's workforce can't afford to have a bad situation made worse.