Necessity of Health Care Reform Act to Small Businesses

By | October 13, 2010

The Council of Economic Advisers (CEA) analyze and gives a report of the challenges that are faced by the small business firms which are under the current health care system. It also analyzes the impacts of health care reform on small businesses and the employees whom they employ.

Key findings of the report
The health care system in US has imposed heavy taxes on small businesses and their employees. Small businesses pay til 18 percent more per worker than the large firms for the same health insurance because of high broker fees, fixed administrative costs and adverse selection.

Small businesses are much less likely to provide health insurance for their employees than the larger firms because of the higher health care costs. About just 49 percent of small businesses with 3 to 9 workers and about 78 percent of firms with 10 to 24 employees offered any type of health insurance for their employees in 2008.

There is a decrease in fraction of small firms that offer health insurance in the recent years. The fraction of small firms with 3 to 9 employees that offer health insurance to their workers dropped from 58 to 49 percent from 2002 to 2008.

Benefits of Small Business on Implementing Health Care System

  • As per the health care reform in current draft will reduce the burden of small firms and their employees.
  • The small businesses which meet a particular criteria will be able to purchase health insurance with the help of insurance exchange. This will allow them to choose from a multitude of plans which would provide better coverage at lower cost.
  • Number of small businesses which are providing health insurance for their employees will be able to receive a small business tax credit. This will decrease costs and enhance coverage.
  • There will be good improvement in productivity and reduction in absenteeism which result from better health. Which is mainly because of expanded coverage. This will particularly benefit small businesses.
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