Since the passage of the Health Bill Provision, there's been plenty of caffeinated discussion on both sides anticipating the impact to business from this landmark legislation. A couple of recent articles in the Wall Street Journal have focused on employers concerns and hopes regarding the new health care legislation.
During the week before the bill's passage by the House of Representatives, Caterpillar, Inc. sent a letter to House Speaker Nancy Pelosi and House Minority Leader John Boehner, saying the additional costs will result on a $100 million charge to earnings this quarter.
The $100 million charge to earnings represents federal income taxes on the subsidies Caterpillar receives for providing prescription drug benefits for its retirees and its spouses, which number about 40,000 retirees. The charge is expected to be a one-time cost, but the company expects that higher taxes and other cost increases related to insurance mandates in this legislation will restrict the company's ability to recover following a 75% plunge in 2009 profits.
"From our point of view, a tax increase like this cannot come at a worse time," said Jim Dugan, a Caterpillar spokesman. Caterpillar believes that the new legislation will hinder their ability to complete in a global market against international countries where health care insurance for employees is not mandated.
While companies are confused about how the health legislation will impact them in the future, not all believe that it will adversely effect them.
Small businesses were specifically addressed in the new legislation with requirements for employee coverage, penalties for non-compliance and subsidies for participation. In 2014, employers with more than 50 workers that do not offer health care coverage will pay an annual penalty beginning at $750 per person.
Smaller companies (i.e., less than 50 employees) will receive a tax credit for providing health care coverage as long as they have fewer than 25 employees earning less than an average annual wage of $50,000. This has lead some groups, such as the National Federation of Independent Business to be concerned that the new legislation discourages businesses from growing and constrains wages.
"The tax credit itself is limited by a firm's size and wages, so if you want to remain eligible, you need to remain small and not pay high wages," said Amanda Austin, director of federal public policy for the National Federation of Independent Business.
These articles provide a insight from small business owners revealing their thoughts and hopes for the new legislation. Here's a sampling of those quotes:
- "Premiums will go up under this bill faster than they would otherwise, says Keith Ashmus, chair of the National Small Business Association. He believes the bill is likely to increase insurance premiums because it eliminates caps on benefits and requires insurers to cover dependent children until age 26.
- Jim Houser, co-owner of Hawthorne Auto Clinic, Inc., located in Portland, OR, thinks that the new legislation will help lower insurance premiums for small businesses. "There will be more people in the system and so the costs will be spread out among a larger pool of people." His business now covers 100% of the health insurance premiums for its nine full-time employees. His company's insurance premiums have doubled over the past eight years and now account for 20% of payroll.
- Georgia Berner, owner of Berner International Corp., a manufacturer located in New Castle, PA, employees 60 and covers 100% of their insurance premiums. She believes that her competitors will be forced to offer their employees comparable health care coverage under the new legislation. "It is leveling the playing field. If my competitor doesn't have to have coverage then he can price his product more market friendly."
- Patty Briguglio, owner of MMI Public Relations, Inc. located in Raleigh, NC, pays her young workforce of 20 workers $2,400 annually for them to buy their own health insurance. "It's less expensive than a group plan because I have a young workforce. What's going to happen? Are they going to force me to buy a group plan that will cost me more? Should I stop growing so I can get more tax incentives?"
Which camp are you in? Do you think the new legislation will have a positive impact on business, wages, and the well-being of our citizens while reducing health care costs, or do you believe that it will constrain growth, add taxes/penalties, reduce the quality of health care and add to our national debt? Refresh your cup of java and respectfully join the discussion by adding your input!
Flickr photo courtesy of newstalkradio
Becky Regan is the founder and President of Regan HR, Inc., a human resources consulting firm specializing in compensation consulting for California employers and a purveyor of online HR products. A former Corporate Human Resources Director (10,000+ employees) with more than 25 years of HR work experience in many industries, her team works with private, public and non-profit clients. Becky is passionate about designing HR programs and compensation plans that build better organizations.
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