Kristie Arslan
Health care reform is the talk of the nation. Between the presidential address to Congress, 24-hour news coverage, town-hall meetings and water-cooler talk, we are all engaged in a national conversation about the future of health care in this country.
New Mexico Senator Jeff Bingaman is one of the key players shaping health care reform. As a member of the Senate’s “gang of six,” he is essentially ground zero for the debate.
For years, Senator Bingaman has heard the concerns that people who are self-employed or who own micro-businesses with 10 or fewer employees have with health care in this country.
Access to affordable health coverage is the No. 1 concern of the nation’s smallest businesses, and they need Senator Bingaman’s support now more than ever.
As of 2007, there were nearly 125,000 self-employed individuals in New Mexico contributing $4.7 billion to the state’s economy. With each business closure or round of layoffs, that number increases. While the self-employed strongly support efforts to reform our health care system, they have particular concerns that are unique to their tax filing status:
• Deductibility of health insurance premiums: Unlike their larger counterparts, the self-employed cannot deduct health insurance premiums as a business expense and instead are taxed on their health coverage. The cost of leveling the playing field for the self-employed is about 2.5 percent of the total price tag for health reform.
For our smallest businesses, this is a small price to pay for a provision that will make coverage more affordable and accessible for 22 million self-employed Americans nationwide. For those in New Mexico paying an average of $12,071 for family coverage and $4,074 for individual coverage, it would mean saving $1,847 and $623, respectively, in taxes on health coverage — a significant sum for the self-employed.
• Expansion of Health Reimbursement Arrangements (HRAs): Also unfair is the fact that sole-proprietors are not eligible to participate in an HRA, which is a flexible benefit option that allows other business entities to help employees with their health care costs. HRAs represent a consistent and stable way for the self-employed and micro-businesses to extend employees financial assistance toward health care costs.
Furthermore, central to the reform debate has been the promise that if you like the coverage you have, you can keep it. The majority of self-employed individuals are covered by plans with high deductibles or limited benefits in order to keep monthly premium costs affordable. Yet, the proposals in Congress contain provisions that will newly define the minimum coverage requirements of all health insurance plans that Americans will be allowed to purchase.
Many of the current policies held by the self-employed and micro-businesses will not meet these new standards.
In addition, while it is important for all, especially the self-employed, to have meaningful coverage, these businesses have concerns that “qualified coverage” or an “essential benefits package” will be defined in a manner that will result in unaffordable policy requirements. Analogous to how states and their various mandates affect cost of coverage, the more extensive the package, the more expensive the policy.
In New Mexico, there are currently 57 insurance mandates affecting the cost of coverage. There must be a balance between cost and coverage and we must ensure that any required minimum benefits package is affordable.
Every dollar counts
The self-employed need better news from the president and congressional leaders than “possible” relief from high health insurance costs. They want to see a plan that includes actual and immediate cost savings. Ensuring that the self-employed have access to affordable coverage and providing them with a tax deduction for health insurance is real savings for small businesses.
And it’s fair, which is why Senator Bingaman has been a champion for this change.
Wednesday night, the president acknowledged that the self-employed struggle with health care coverage, noting that “buying insurance on your own costs you three times as much as the coverage you get from your employer.” We welcome the president’s plan to create “a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices.”
Yet we hope the president, Senator Bingaman, and all of our nation’s policymakers will step up to do more to help the more than 22 million self-employed Americans.
Health care reform is critical to our nation’s future. The path forward must help entrepreneurs, not put up road blocks that prevent their success.
Every dollar counts for the self-employed. And every dollar that is put toward the extra taxes they currently pay on health coverage is diverting money from where it is needed most in this economy: reinvested in their business and supporting their local communities.
Arslan is the Legislative Office executive director for the National Association for the Self-Employed. She directs the NASE’s legislative affairs program in Washington, D.C.