Obama's Plan for Health Insurance for Small Business
Health insurance rates have increased dramatically over the past several years. These rates have significantly impacted middle class families, but have also created a major impact on small businesses. Some small business have had to eliminate their coverage due to the excessive costs. Lawmakers have sought to address this issue, with varying degrees of success.
Small businesses have been hit hard with the economic downturn. Small businesses typically account for a significant percentage of private sector employment, and maintaining their costs plans a major role in the economy as a whole. Few things have risen as quickly as health insurance rates, which has forced many small businesses to limit or even discontinue coverage for their employees.
The Council for Economic Advisors studied the issue, and found that less than half of companies with fewer than ten employees offer health insurance. Escalating insurance rates is the reason for this.
In order to address this issue, the Obama administration proposed the National Health Exchange.
National Health Exchange:
Under this plan, small businesses would be able to purchase insurance for their employees through this exchange, which would theoretically offer lower insurance rates and more choices in different insurance plans than they traditionally have.
Aspects of the Obama plan:
- The plan uses tax credits for small businesses to encourage them to purchase insurance. These tax credits are available if the employer offers good health insurance to its employees and assumes part of the premium cost. These tax credits would be offered on a sliding scale.
- Tax credit plan would extend to employees with fewer than 25 employees, and with an average annual salary of $40,000.
- The greatest tax benefit would be to smaller companies, employing fewer than ten people, with an average salary of $20,000. For these employees, the tax credit would be for fifty per cent of their contribution to the health insurance premium.