For Small Businesses, Tax Credit a Drop in an Ocean of Higher Premiums
The Small Business Administration today released a memo outlining how small businesses can apply for tax credits included in the health care law. But when it comes to the small business credits, it’s worth looking at what the Congressional Budget Office estimated the impact of this provision would be on small businesses:
A relatively small share (about 12 percent) of people with coverage in the small group market would benefit from that credit in 2016. For those people, the cost of insurance under the proposal would be about 8 percent to 11 percent lower, on average, compared with that cost under current law.
However, as previously noted, an article in the New York Times highlighted the skyrocketing premium increases faced by small businesses, profiling small firms receiving premium increases of 20, 40, even 60 percent or more. And the NFIB recently released a video featuring testimonials from its small business members discussing premium increases of over 20 percent. According to CBO, the average tax credit would only cover about HALF of the cost of a 20 percent increase in premiums – meaning premium costs will STILL go up every year, even if a company qualified for the credit.
For small businesses – and for all Americans – the real issue is the rising costs that are leading to higher premiums. And on that count, the health care law fails – the Medicare actuary noted that the health care law will RAISE costs by $310,800,000,000, and further testified the promise that the health care law would lower costs was “false, more so than true.” Even though candidate Obama promised repeatedly that premiums would go DOWN by an average of $2,500 per family, premiums continue to skyrocket – and the tax credit being trumpeted by the Administration today represents a mere Band-Aid on the gaping wound imposed by higher costs.