Health Reform Provides Immediate Help for Texas Small Businesses

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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.  

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About Author

Katherine Haenschen

Katherine Haenschen is a PhD candidate at the University of Texas, where she studies political participation on digital media. She previously managed successful candidate, issue, voter registration, and GOTV campaigns in Central Texas. She is also a fan of UCONN women's basketball and breakfast tacos.

6 Comments

  1. One more bullet point
     Employers with over 50 employees will be forced to offer coverage or pay a $2,000-per-employee fine. Businesses will also face a $3,000-per-employee fine if the coverage that they offer is deemed “unaffordable” for employees (if the employee opts-out and gets a subsidy in exchange). This means that an employer with low-income employees who offers comprehensive, affordable coverage could nevertheless be fined just as much as an employer who offers no coverage at all.

    • Sounds good to me.
      Requiring employers to cover their employees is not such a radical idea. Bigger risk pools will be created which will enable lower costs.  Maybe there will be a little less profit…but the employees will be in better health and more productive. What you are describing is just a crazy talking point.  

  2. Actually is crazy
    Small businesses do not make obscene profits.  So saying maybe they will be less profitable is not a throw away line. What will happen in many cases will be this (one of the many unintended consequences)

    Small employers will:

    Reduce their work force below 50

    In the case of manufacturing, move manufacturing off shore.  In other words contract manufacturing to most likely China.  

    Many will sell their companies to competitors.  In most of these cases the competitor is buying market share and will generally lay off most workers.

    This is one reason many estimates are that this bill will be a major net job loser  

    • Obscene no
      I didn't say they make “obscene” profits. (I'm assuming you are addressing this post to my post even though you didn't hit “reply.”) If the “standard” for working for a small employer is “no insurance,” then small employers won't even consider covering their employees. And that's the “obscene” part of it.

  3. Oh my god, you mean my former employer would have to
    stop leasing a new Jaguar and a new Infiniti every year and maybe go to every three years so that the staff could have health care? How awful!

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