Report: Small Businesses Would Be Hurt By Health Care Repeal

By: Alex Goldsmith Email
By: Alex Goldsmith Email

A report released Monday by the Public Interest Research Group says that small businesses would be hurt by any health care repeal.

The main reason? Small business tax credits built into the law that can pay back as much as 35% of an employer's health care costs.

Mark Hodesh, owner of Downtown Home & Garden in Ann Arbor, certainly benefitted. His business is going to receive $15,000 in tax credits, or 30% of the business' total health care costs.

Hodesh saw something positive coming in the law before it passed.

"In the spring when I suspected reform was going to pass I knew it would be aimed at my small business," said Hodesh. "What it did was it gave me the confidence to hire another person."

"The law can do nothing but help small businesses," said Meghan Hess with the Public Interest Research Group in Michigan (PIRGIM). "These tax credits are allowing them to grow their business and expand in ways they wouldn't be able to do otherwise."

Qualifying for the full credit isn't the easiest thing to do. A business needs to pay at least 50% of premiums, employ 10 or less people and pay those employees an average of $25,000 or less to get the full 35% tax credit.

Scott Lyon of the Small Business Association of Michigan doesn't see a lot of businesses fitting that profle in his talks with thousands of small business owners since reform was passed.

"There are partial credits," said Lyon. "But the cliff that goes from 0 to 35 percent is very steep."

Lyon also sees the credits as a temporary fix as they expire in 2015. He says the underlying problem hasn't been solved.

"Health care costs are rising at 3 to 4 times the rate of inflation," said Lyon. "There doesn't appear to be anything in the Affordable Care Act that slows down those rising costs."


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