Joe Pitts: Obamacare will destroy small businesses

Health care Reform and Small Businesses

By Congressman Joe Pitts

Among the most important reasons we need to reform health care is to take pressure off of our nation's small businesses so that they can reinvigorate job growth. With unemployment at its highest in decades, we need to find ways to free small employers to invest in their business and grow our economy. Unfortunately, sharply rising health care premiums hold back both growth in wages and employment.

With premiums rising faster than inflation, employers are faced with difficult choices about where to get the money to pay for health insurance. Some must reduce benefits or hold off on raises while others have no other choice but to drop benefits all together.

Small businesses have created more than 72 percent of all jobs in the country in recent years. If we want to get these businesses growing again, we have to find ways to free them from spiraling costs.

Unfortunately, I don't believe that current health care reform bills in Congress will hold back costs. In fact, businesses will see more taxes and regulations under the new legislation with little hope that health care costs will level off.

The legislation in the House of Representatives, H.R. 3200, contains a new 5.4 percent surtax on individuals with more than $350,000 of income. Since many small business owners pay at the individual rate, they would have to take money out of their business to meet their tax bill. Since President Obama also supports a rollback of the 2001 and 2003 tax cuts after next, some small business owners would see a net tax increase of 10 percent in the next two years.

The House bill also contains an employer mandate to provide health insurance for employees. If an employer is unable to purchase affordable insurance, they would face a government fine. Estimates indicate that businesses will pay some $208 billion in fines in just the first 10 years of the bill.

Government fines and taxes will do little to restrain costs or help businesses provide insurance. There are, however, actions that we can take in Washington to help small businesses and their employees.

I have worked with Small Business Committee Chairwoman Nydia Velazquez (D-NY) to introduce the Small Business CHOICE Act. This bipartisan legislation allows small businesses to obtain coverage at bulk rates through purchasing pools. The bill would help small businesses offer health insurance through a refundable tax credit that minimizes risks for insurance companies by letting small firms pool their employees with those of other businesses in voluntary health cooperatives.

This would allow entrepreneurs to negotiate better rates for coverage for their employees and themselves. Additionally, self-employed individuals would save $5,000 per year on health coverage costs under this legislation.

There are other solutions that wouldn’t punish job creators with higher taxes or more regulation. We can work to enact genuine legal reform and institute policies that incentivize wellness programs. Expanded health savings accounts could provide additional flexibility to small businesses in how they contribute to employees' health.

Also, we can allow small businesses to shop across state lines for health insurance. State mandates raise costs and businesses located in a single state have no choice but to pay for the expensive plans forced on them by state government. Meanwhile, national competitors are able to purchase one plan to cover employees across the country without regard to state regulations.

Small business owners are justifiably skeptical of a comprehensive government plan and a survey by the City Business Journals Network indicates that more than half of them are concerned that changes to the system will increase their operating costs. Increased costs will hurt job growth when we need it most.

As we've already seen, there is some bipartisan agreement on how to help small businesses purchase health insurance. Unfortunately, these solutions are being ignored in favor of a plan that would give the government more authority over healthcare. Small employers are working hard to grow their business; government can’t help them do this by increasing their regulatory and tax burden.

U.S. Rep. Joe Pitts is a Republican who represents Pennsylvania's 16th Congressional District, which includes parts of Chester, Berks and Lancaster counties.