Businesses – small and large – prepare for health reform impact

USA Today columnist Rhonda Abrams outlines how the new health law affects small businesses. "The good news: For the first time, there's real help for entrepreneurs. If you can't afford or can't qualify for insurance, you'll have new options starting in 2014. If you're struggling financially - as many self-employed do - you may qualify for a government subsidy or Medicaid. ... The downsides: There are no caps on health insurance premiums, so I expect insurance companies to hike rates significantly before they have competition in 2014. If you have more than 50 employees, you'll have to provide coverage or pay a fine beginning 2014" (Abrams, 3/26).

"Small businesses, some of which had fought against the health-care reform bill, will now have to adjust to life with it," The Wall Street Journal reports. "Some groups, such as the National Federation of Independent Business, are concerned that the legislation discourages businesses with fewer than 50 employees from expanding their payrolls. ... Others say the legislation, which would create state-based exchanges through which companies can purchase coverage, doesn't address a chief concern: the spiraling costs of health insurance" (Needleman, 3/25).

Big companies will also adjust, according to The Wall Street Journal: "In the wake of Washington's health-care overhaul, some companies are taking big one-time charges for anticipated costs, fanning tension with the administration over the legislation's impact on corporate America. Three companies [Deere & Co., Caterpillar, AK Steel] that were among vocal opponents of the legislation have warned they would see an immediate impact on their earnings as a result of the loss of deductions on tax-free subsidies they receive for providing retiree prescription-drug benefits. ... Although the changes don't go into effect until 2013, companies say they have to take the charge to earnings now, to reflect the loss of the future tax deductions. ... Administration officials say companies are exaggerating the impact of the loss of the deduction because of their general unhappiness with health reform" (Maher, Schultz and Tita, 3/26). 

The Pittsburgh Tribune-Review points out another impact: "Under health care legislation President Obama signed into law this week, employers could save money by dropping insurance for employees and paying mandated penalties and costs, experts said Thursday." Because new insurance exchanges will offer people affordable alternatives to employer-sponsored coverage, firms may not longer feel obliged to offer the coverage (Stouffer, 3/26).