What Small Businesses Need to Know about the New Healthcare Law

By Dan Danner

The long debate over healthcare reform has ended, leaving many small business owners more confused than ever over what to expect. But they know one thing—they’ll be paying for it for years to come.

The package won’t be fully implemented until 2018. However, there are important provisions that will be effective this year, in 2011 and 2012 that entrepreneurs need to begin planning for now. The changes largely involve new taxes, fees and mandates on individuals and small business.

Read more: What Small Businesses Need to Know about the New Healthcare Law

Swap Cap-and-Trade for a Workable Energy Policy

Most policymakers agree that we need an energy policy that creates sustainable economic growth, benefits all Americans and protects the environment. If that’s truly the case, they should go back to the drawing board to find alternatives to the burdensome, big-government energy policies currently popular in Washington.

Proposals known as “cap-and-trade,” intended to combat global warming and revamp America’s energy policy, are deeply unpopular with both the voting public and the entrepreneurs who create most of the nation’s new jobs.

Recent polls that my organization released are clear: An overwhelming majority of small business owners oppose cap-and-trade legislation that has passed the House of Representatives. More than 70 percent of the business owners we surveyed think that the legislation will raise energy costs, and similarly large majorities don’t buy supporters’ claim that it will create new jobs or improve economic growth. And virtually none said that regulating greenhouse gas emissions should rank as a top national priority.

Read more: Swap Cap-and-Trade for a Workable Energy Policy

Fix the Broken Insurance Marketplace

Whether they’re young or old, entrepreneurs always have a hunger to come up with the next big idea, or to do something better than anyone else. That’s the spirit that lives in each and every small business owner. That’s what drives them to create jobs and continue to build our economy.

There are, however, many challenges that new and even well-established businesses face—in particular, the rising cost of healthcare and health insurance. The inability to affect or reduce health insurance premiums from year to year continues to be the greatest challenge for small business owners, along with the lack of competition and choice in the marketplace.

Read more: Fix the Broken Insurance Marketplace

The State of Small Business

We have looked at the state of small business in our union, and it is not good.


Our Small Business Economic Trends monthly report, which has tracked small business conditions for more than 35 years, shows that small business owners nationwide are struggling to keep their doors open. Optimism among small business owners declined in the latest report as small business owners experienced weak sales and negative earnings.

Read more: The State of Small Business

Small Business Champion of the Year

Small Business Champion of the Year

They started with a small salvage yard and one garage, never borrowed money to finance the business, and today run one of the most sophisticated automobile dismantling and recycling firms in all of North America. For the can-do example they set and for helping advance the small business agenda in the Montana Legislature, Loretta and Ron Miller are this year’s Solveras/NFIB Small Business Champion of the Year.

The honor was conferred upon the Millers, who own Green Meadow Auto Salvage, Inc., in Helena, by the Montana Leadership Council of the National Federation of Independent Business and Solveras Payment Solutions, one of the nation’s leading payment processing companies for small business. Each year, NFIB and Solveras single out a small business owner in all 50 states for special recognition and honor him or her with the prestigious Small Business Champion of the Year award. This is the sixth year America’s leading small business association has recognized small business owners who go the extra mile for their fellow entrepreneurs.

“The biggest contribution to building our business was that we never borrowed money,” said Loretta Miller. “We bought the business on a contract with the previous owner, but back then banks wouldn’t loan operating capital on an auto salvage yard. So we built it up from cash flow day by day. A second factor was that Ron could take anything mechanical and make it do whatever you wanted it to do. And, finally, getting the business totally computerized to meet today’s technological world was critical. You can now go online and visually see any part or car in our inventory.”

“There is much more to this award than the Millers’ success in establishing a cutting-edge business,” said Riley Johnson, state director for NFIB/Montana. “Loretta Miller has answered the call to testify before the Legislature on issues critical to small business solvency. Her persuasion helped the passage of Senate Bill 371 (even though it was later vetoed by the governor), which set the course and scope of workers’ compensation benefits. Her assistance was instrument on passage of House Bill 204, which established Montana’s first safe-employer pool for workers’ compensation, and the defeat of Senate Bill 506, which would have imposed a burdensome local-options tax. She also assisted me in discussions with Sen. Max Baucus in his drafting of a national healthcare bill in the U.S. Senate. All small business owners in Montana owe her a big debt of gratitude.”

The Millers can be reached at 406 458-9204.



The Road to Single-Payer Healthcare

House Speaker Nancy Pelosi and others in Congress have been talking a lot about how a government-run public option will lead to lower costs and more choices for health insurance. Nothing could be further from the truth. Instead, the reality is that a “public option” would restrict “choice” to a single plan: the government-run plan.

But what it’s really intended to do, according to prominent leaders like U.S. Rep. Barney

Frank of Massachusetts, is to put us on the road to single-payer, government-run healthcare. On a YouTube video that’s making the rounds, he says, “If we get a good public option, it could lead to single-payer [healthcare] and I think that’s the best way to reach single payer.”

Sure enough, the House bill has elements that are deliberately designed to drive small business owners out of the private market and into the public option. For example, the bill includes a provision that would require employers above a certain revenue threshold to offer a health insurance plan, whether they can afford to or not.

If they don’t, they’re forced to pay a tax of up to 8 percent of their total payroll. No matter how profitable or unprofitable a business might be, the owners are forced to pay this tax if they do not provide “qualified” health insurance to their employees.

The bill also establishes a confusing test that hits employers who already offer health insurance. Small businesses must, one, offer that qualified plan (determined by a government-appointed board); two, provide both individual and family coverage; and three, meet minimum contribution levels, which could be more than they are already paying, let alone can afford.

And if employees decline coverage and decide to go to the government-run option, the employer must also pay the payroll tax. All of these added expenses and new rules are likely to lead small business owners to throw up their hands and say it’s cheaper to drop their plan and pay the tax.

As you can imagine, these ideas scare and outrage many small business owners, and rightly so. One owner told us, “How do I add expenses to my company when I’ve already lost $100,000 this year and am just desperately trying to survive? We lost one-third of our employees and the remaining ones are working reduced hours.”

Another member wrote in, “Mandates are ineffective [and] this bill deprives me of my rights to determine how to use my resources. It harms small business and their employees—the very groups it is supposed to help.”

The House bill simply will not work for small businesses. Small business owners, their employees and families are in dire need of health insurance reforms that will lower costs, increase competition and result in more choices for private health insurance.

That’s why thousands of small business owner across the country are contacting their legislators while they are back home in August. Their message? If the president and Congress insist on going down the House’s road, they will actually make things worse for small business. Anyone who values the contributions small businesses make to their communities and to the country should tell their representatives the same thing.

Dan Danner is president and CEO of the National Federation of Independent Business in Washington, D.C.



Time to Cap and Trade This Bad Idea

By Riley Johnson



Virtually every elected official from Helena to Washington, D.C. expresses deep concern about the loss of jobs and the need to jumpstart our economy. After all, the national unemployment rate sits at around 10 percent (the highest in a quarter century), and here in Montana, it stands at a lower but still troubling 6.4 percent. And lots of job creation and economic proposals—some good, others bad—will appear on state and federal legislative agendas in coming months.

Read more: Time to Cap and Trade This Bad Idea

Healthcare Reform Takes a Left Turn

Healthcare Reform Takes a Left Turn

By Dan Danner, President

National Federation of Independent Business

The road to healthcare reform took a hard left turn last week.

The leaders of both the House and the Senate announced that they would bring bills with a public option to the floors of both chambers for a vote.

The announcement by House Speaker Nancy Pelosi (Calif.) was no surprise, as all previous House versions included a public option. But Senate Majority Leader Harry Reid (Nev.) caught many off guard with his plan, which came despite the Senate Finance Committee’s rejection of the public option.

Among other provisions of the nearly 2,000 page bill, Pelosi’s plan creates a public option that pays medical providers rates negotiated by the Secretary of Health and Human Services and expands government spending on the Medicaid program. The speaker intends to have a vote on the House bill this week. But the real battle will come later in the Senate.

As I write, details of the Senate proposal are sketchy, but it’s clearly designed to appease Senate liberals. It would be a national, government-run program that would negotiate payment rates with doctors, hospitals and other healthcare providers.

In an attempt to gain moderate senators’ support, Sen. Reid’s proposal would allow states to opt out of the government program at some point, which hasn’t been determined. Sen. Reid’s attempts to appeal to the left wing while also keeping his moderates happy may well backfire. Two prominent centrists, Sens. Joe Lieberman (Conn.) and Olympia Snowe (Maine), have already come out against his public option proposal, and concerns have been raised by others such as Sens. Evan Bayh (Ind.), Mary Landrieu (La.) and Blanche Lincoln (Ark.).

The opt-out, as outlined by Sen. Reid, comes with a high price tag in terms of access and affordability. In an effort to coerce states to remain part of the government-run public option, the opt-out is all or nothing. If your state decides not to participate in the public plan, then your state may forfeit opportunities to access other private market solutions. This isn’t providing states or small business owners with more choices. Instead, it’s saying take the government plan, or risk leaving all the other options at your state line.

In addition, if you opt-out as a state, you’ll still be paying – and paying and paying. So, while an opt-out provision may sound good, in the end, we’ll all still be paying for it. Why? Because even if a state opts out of the program, it appears likely that all taxpayers will be on the hook to pay for it, whether it’s financing subsidies or simply the long-term costs of running yet another complex bureaucracy.

States don’t need a public option to spur competition. They need a reformed marketplace where all private insurers have incentives to compete. The public option doesn’t lead to more competition, but it does set up perverse disincentives that will further stifle the private-market competition that small business owners have fought for all these years.

Reform for the sake of reform is not what small business wants or needs. Instead, they want access to a reformed private marketplace with lower costs, more affordable options and real competition for their healthcare dollars.

That is the message small business owners have shared throughout the health reform debate, and it’s the same message they took to the White House last week in a meeting with the President.

Small business owners hope that the White House and Congress will remember that new public programs – however couched as a “consumer choice option” or with “opt out” ability – are still costs that will ultimately come out of their pockets and prohibit them from growing, investing in their business and hiring new employees.

We have said repeatedly that we remain committed to trying to support reform efforts that will provide more affordable and accessible healthcare options for small employers and their workers. No one needs reform more. But in the end, small businesses’ support or opposition will rest on whether or not they’re persuaded that costs will actually be reduced, and the quality of their healthcare will not be compromised.



Cap and Trade Means Lights Out for Small Businesses

Get ready to pay a whole lot more to keep the lights on.


Congress currently is working to pass a huge energy bill. The centerpiece is a system to force energy utilities to purchase government credits to offset their greenhouse gas emissions. This would in effect be an energy tax on the American people as the utilities pass the increased costs along to consumers and small business owners.


The plan is called 'cap and trade' and it refers to a new trading market that Congress wants to create. The government will set limits on the amount of greenhouse gases businesses are allowed to emit (the 'cap'), and then businesses will purchase credits to offset their emissions.


Businesses that reduce their emissions below the cap will be free to sell their credits to other businesses (the ôtradeö), a system with the potential to make trading mortgage derivatives look like a good idea.

However, in the initial phases, more than 80 percent of the credits will be given away by the government, rather than auctioned off as originally planned. The credits will go to big businesses hand-picked to garner enough support to pass the bill out of the House Committee on Energy and Commerce.

Even President Obama admits current cap and trade proposals will cause energy rates to rise. 'Under my plan of a cap and trade system, electricity rates would necessarily skyrocket,ö he told The San Francisco Chronicle last year. At the same time, the House Committee on Ways and Means estimated we would lose anywhere from 1.8 million to 5.3 million jobs.

That's because big businesses will pass the cost on to small businesses and consumers in the form of higher prices. An analysis by the Massachusetts Institute of Technology of a less-restrictive bill in the last Congress estimated electricity rates would go up at least 40 percent.

And that would be devastating to small businesses. Consider the stories weÆve already heard:

* A trucking company owner in Ohio spends more than $4 million a year on his energy bills. If his costs increase 40 percent, heÆll be spending $5.6 million a year just on electricity and fuel. In order to absorb the new energy costs, he said he would have to raise his prices, as well as cut hours and employees.

* A marketing and exhibit company annually spends about $120,000 on energy costs, seeing no decrease despite investing in a $40,000 ôsmart technologyö heating-ventilating-air conditioning system. This company wants to open a second location in Illinois, but the owner says with expected cost increases, including healthcare, property insurance and legal counsel, it may be impossible to expand.

* The Pennsylvania owner of four athletic clubs spends about $600,000 a year to power the heating-ventilating-air conditioning systems and lighting the facilities. If that cost goes up 40 percent to $840,000, he says his only choice will be to close his business.

Everyone wants cleaner air and a better environment. But we all need to do our part to help. Putting the burden on those who can least afford it is not the way to go.


Dan Danner is president and CEO of the National Federation of Independent Business in Washington, D.C.

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