Big Companies & Small Businesses View Health Plan Differently

Published: Fri 20 Nov 2009

Wendy Blair

Almost 160 million people in the United Stated have health insurance through their place of employment. Those companies will experience varying impacts from the health care reform bill, mostly based on the firms' sizes.

According to the House's version of the health care bill, employers who have a yearly payroll of $500,000 or more must offer their employees health coverage and pay at least 72.5 percent of the annual premium for individual coverage and 65 percent of family coverage premiums. Companies that do not comply with these laws must pay a penalty fee of 2-8 percent, depending on the business' size, of their payroll.

A survey conducted by the Kaiser Family Foundation and the Health Research and Educational Trust reveals that approximately 59 percent of small businesses, or those with 3-199 employees, provided health insurance to their workers in 2009, contrasted with 98 percent of large corporations.

"They may not see as big a difference as a small business might," explained Devon Herrick, a senior fellow for the National Center for Policy Analysis.

Another piece of the House bill that may impact owners of small businesses is a new tax of 5.4 percent on Americans who earn over $500,000 per year or households that earn more than $1 million annually. For many small businesses, the income of the company manifests on the owner's income taxes, which means many small-businesspeople could get slapped with a new tax.

"This is not about health care," stated Bob Prybutok, the president of Polymer Technologies, a Newark, NJ-based manufacturer of composite materials. "This is about government control."

Mr.Prybutok, who is also the chairman of the National Federation of Independent Business of Delaware's leadership council, said his company offers health insurance to its over 100 workers. The business self-insures through an arrangement with an administrative services firm and then directly negotiates with healthcare providers.

However, if Prybutok must pay extra taxes, he says it could make more sense financially to drop his employees' health care and instead pay the penalty fee. For this reason, he believes President Obama and Democrats in Congress are not being candid when they claim that consumers can keep the health insurance they currently have.

"Right now, health care costs me $750,000 a year," explained Prybutok. "I'd be miles ahead paying the 8 percent penalty and letting all my employees go into the public option."

The NFIB and other business organizations vehemently oppose the House's bill. However, the health care reform bill got a surprising vote of confidence last week from the Business Roundtable, a group that represents the CEOs of large companies like DuPont.

President Obama said that the Business Roundtable's favorable report on the bill "underscores what experts and businesspeople have told us all along-comprehensive health insurance reform is one of the most important investments we can make in American competitiveness."