6 Ways Health Care Reform Will Help Startups

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In the middle of the economic crisis, small businesses are struggling to survive by keeping profits as well as diminishing costs. One of their greatest costs is healthcare, and in order to cope with this most choose not to offer insurance to their employees and still some had to make the hard decision of laying them off.

The U.S. health care system imposes a heavy “tax” on small businesses and their employees, that are 18 percent higher on average than what large businesses pay for the same coverage. It is a hard choice small businesses have to make to survive, but there is hope.

In order to save small businesses, The Obama administration implemented a solution in its health care reform, since small businesses are a crucial source of innovation, economic, and job growth. Here are 6 ways in which the health care reform will help startups. All changes will happen starting in 2014.

1. Establishment of Small Business Heath Care Tax Credit

The Small Business Health Care Tax Credit can cover up to 35 % of the insurance premiums a small business pays to cover its workers. In 2014, this rate will increase to 50 %.

2. Creating Health Care Insurance Exchanges

Starting in 2014, firms with 100 or fewer workers will be able pool their buying power and reduce administrative costs by purchasing insurance through an exchange. This will provide more choice, lower prices, and greater bargaining power.

3. Ending Price Discrimination

Health reform will end the price discrimination of small businesses with sick workers. Starting in 2014, rules will prohibit insurers from charging more to cover small businesses with sick workers or raising rates when someone gets sick.

4. Health Care Security will Foster Entrepreneurship

Generally, workers stay in large firms and are reluctant to leave a job with employer-sponsored health insurance out of fear that they will not be able to find affordable coverage, specially those with families; even if they would be more productive working at a small business or becoming an entrepreneur.

Health reform will eliminate price discrimination, or coverage exclusion for pre-existing conditions, making it easier for small businesses to attract the best workers and easier for entrepreneurs to strike out on their own.

5. Reducing Health Insurance Hidden Tax

Currently, the cost of treating the uninsured adds a “hidden tax” of over $1,000 to every health care premium. Health reform will significantly reduce this tax by covering an additional 32 million additional Americans by 2019.

6. Reducing Premiums in Small Group Market

In a recent national survey, nearly three-quarters of small businesses that did not offer benefits stated high premiums as the reason. Taken together, the measures described above will significantly reduce premiums for small businesses.

If you want to read the government report, click here.

Although these changes are going to be effective starting in 2014, offering apparent benefits to small businesses, uncertainties may paralyze employers in their decision making process. Here is a video showing the hardships that U.S entrepreneurs are facing with an unknown future of healthcare.

2 thoughts on “6 Ways Health Care Reform Will Help Startups

  1. The startup community is so important! Thanks for the info i had no clue that health care could effect small businesses!

  2. Thanks on your marvelous posting! I certainly enjoyed reading it, you
    may be a great author. I will be sure to bookmark your blog and
    will often come back down the road. I want to encourage that you continue your great work, have a nice day!

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