Kagen Says Health Care Will Help Economy Recovery

FOR IMMEDIATE RELEASE:        
July 27, 2009

Contact:  Jake Rubin
(202) 225-5665

(WASHINGTON, DC)  Congressman Steve Kagen, M.D. says reforming our health care system will help small businesses create jobs.  Kagen cites a recent report from The Council of Economic Advisers that says the House and Senate legislation contain a number of features that are designed to reduce the burdens on small business owners and their employees.

Up to 17,200 small businesses in the 8th Congressional District (86% by some estimates) could receive tax credits to provide coverage to their employees.  Nationally, this would be a $52 billion windfall for small businesses over the next ten years, according to the Council of Economic Advisors.

“I am working hard to make sure that small business owners are protected in this legislation,” said Dr. Kagen.  “We are building a healthier economy.  Costs for health care are the largest expense for every family, every businesses and government at every level.  When we reduce costs for health care, we will keep more money in our pockets, reduce taxes and allow small businesses to create the jobs we need.”

The Council of Economic Advisers found that reducing the growth rate of health care costs by 1.5 percentage points per year would raise family income by nearly $2,600 in 2020 and by almost $10,000 in 2030.

“Most small businesses in Wisconsin are family owned and run.  We are talking about allowing business owners to insure their families,” said Kagen.

Under the proposed legislation, small businesses with 25 employees or less and average wages of less than $40,000 would qualify for tax credits of up to 50% of the costs of providing health insurance.  Small businesses that meet certain criteria would be able to purchase health insurance through an “insurance exchange” – allowing them to choose among a multitude of competing plans that would provide better coverage at lower costs than they could find in the current small group market.  Many small businesses that provide health insurance for their employees would receive a small business tax credit to alleviate their disproportionately higher costs and encourage coverage. The tax credit would be targeted to those firms with employees whose average wages fall below a certain threshold.

The creation of an insurance exchange would also provide better and lower-cost options for workers in small businesses that do not offer health insurance. Low-income individuals and families would receive sliding scale subsidies to help them purchase insurance. Additionally, health insurers would not be allowed to screen potential enrollees for pre-existing conditions.  The proposed reforms could help spur entrepreneurial activity by increasing the incentives for talented Americans to launch their own companies, and could increase the pool of workers willing to work at small firms.   Finally, successful reform would reduce the phenomenon of “job lock,” in which workers are reluctant to leave a job with employer-sponsored health insurance out of fear that they will not be able to find affordable coverage. Small firms that are unable to provide health insurance for their employees bear the greatest cost of this phenomenon.

The current health care system imposes a heavy tax on small businesses and their employees. Those small firms that do offer coverage have to pay a higher cost than their larger competitors. To the degree that higher costs are passed on to workers, small firms pay lower take-home wages to their employees.

You can view the report at:
http://www.whitehouse.gov/administration/eop/cea/Health-Care-Reform-and-Small-Businesses/

The House Energy and Commerce Committee has also released information about Benefits of America’s Affordable Health Choices Act in the 8th District of Wisconsin:

•    11,600 seniors would avoid the donut hole in Medicare Part D
•    1,160 families could escape bankruptcy each year due to unaffordable health care costs
•    Hospitals and other care givers would receive $82 million in uncompensated care annually
•    63,000 uninsured individuals would gain access to affordable care.