One of the biggest boons to our economy in the recently passed health reform bill will come in the form of support for small businesses. Small businesses are the backbone of the Texas economy. There are over 1,988,900 small businesses in Texas. Small businesses amount to 98.7% of employer businesses in the state, and employ 47.7% of non-farm private-sector workers. (More facts from the U.S. Small Business Administration here, warning PDF).
However, small businesses often have great difficulty providing health insurance for their workers, a problem compounded during Rick Perry's tenure as governor. Insurance premiums in Texas have risen 91.2% in the past 10 years, and often small businesses and their workers suffer the most.
Only one-third of Texas small businesses with fewer than 50 employees provide health coverage benefits. Many small businesses have been priced out of the health insurance market and those that do provide coverage often see premiums spike sharply when one or two workers get sick and rack up big medical bills. Texas Department of Insurance data show that some small Texas firms pay as much as $22,000 per employee per year for coverage, much more than the highest rates paid by larger employers.
Thankfully, many of the worst abuses and practices will end, thanks to the health reform bill. The Center for Public Policy Priorities, Consumers Union, and Small Business Majority released a great fact sheet today on how health reform passed by the Democratic majorities in the House and Senate and signed into law by President Obama will help Texas small businesses:
Health reform will help Texas small businesses in several key ways:
- Beginning this year, eligible small businesses will be able to lower their costs significantly with a tax credit of up to 35 percent of the employer's share of the premium. The tax credit will jump to as much as 50 percent of the employer's share starting in 2014. Altogether, these tax credits will provide an estimated $40 billion in assistance to small businesses over the next decade.
- Starting in 2014, the purchasing power of Texas small businesses will increase because they can buy coverage for their workers alongside members of Congress in a new marketplace called an insurance exchange. The exchange will have a bigger risk pool so rates should be more affordable than buying alone in the open market. According to the Business Roundtable, these exchanges could reduce administrative costs by as much as 22 percent.
- Health care reform will prevent insurers from discriminating based on health status, which means small businesses won't get hit with unfair premium hikes just because one worker becomes ill. Under the bill, insurers can't charge more if someone in the company has a pre-existing medical condition or has a major health crisis while in the health plan. Insurers must also stop charging small employers more based on having few employees, the gender of the employee, or the type of work the business does.
- Health reform will help small businesses attract talented workers and become more competitive by making health coverage more affordable. And as more small business employees get coverage, productivity will increase because workers' health will improve and sick days will go down.
Know the facts! Tell your friends and relatives: health reform will help the Texas economy. Don't listen to the fear-mongering of Rick “OMG Obamacare!!” Perry and don't fall for AG Abbott's frivolous lawsuit.
The fact is, these reforms will enable further creation of small businesses in Texas. The new insurance exchanges and consumer protections will enable individuals to get good coverage if they leave their large employer to set out and hang up their own shingle. There's tremendous opportunity for growth, creativity, and innovation in our economy. The health reform bill will enable many individuals to finally take advantage of this, to the benefit of all Texans.