Silkin Management Group: THE HEALTH CARE BILL AND SMALL BUSINESS – HOW DOES IT AFFECT YOU?
THE HEALTH CARE BILL AND SMALL BUSINESS – HOW DOES IT AFFECT YOU?
As President of Silkin Management Group, I’ve been following the various versions of Health Care Legislation that has been going through the House of Representatives. As I’m sure most readers know, a final version of the House bill barely passing on Saturday night.
My interest in following this legislative process is two fold: how will this affect our clients at Silkin and how will it effect the management of my company? The House bill is not an exciting prospect for either. The best summary of this I found in an article on November 9th in the Wall Street Journal. You can access that article here: Small Business Crunches Numbers.
According to the author of this article, “The House bill mandates that employers with payrolls above $500,000 must contribute -- for each full-time employee -- 72.5% of the premium cost for single coverage and 65% of the premium cost for family coverage. The penalty for failing to do so is a 2%-to-6% tax on employers with payrolls between $500,000 and $750,000 and an 8% tax for employers with payrolls above $750,000.”
Essentially then, if you aren’t already paying for health insurance for your employees, which a majority of small businesses aren’t doing because they can’t afford it, you will either have to pay the premiums or get taxed an additional 5% to 8%. I wonder, have any of our law makers stopped and asked the simple question: “If a small business can’t afford the payment now, how are they going to be able to afford this additional mandated cost?” Has anyone stopped and asked, “Where will the money come from?”
Since, in my opinion, most of our lawmakers have never run a business themselves, never had to make payroll week to week or month to month, never had to let employees go in order to cut costs and all the other tough decisions all businesses, very much including the clients of Silkin Management Group, have to make, they just don’t have much reality on what effect their mandate will cause with small business owners.
Let’s keep it simple: if a business cannot afford to pay health insurance premiums now, how will they afford it in the future? There are only two avenues to take to accomplish this: increase of net income to cover the cost, or decrease of overhead. And what is the primary overhead cost of Silkin clients and most small businesses? Payroll.
During the tough economic times we are in, most small businesses are not growing enough in net income to afford this additional cost. Although by the last survey we did, our average Silkin client’s production is growing even during this down economy, adding this significant cost to their overhead will not be easy. But the majority of small businesses are not growing enough to handle such an expense. What do they do?
Their primary choice may be to lower overhead by getting rid of one or more employee. I think that is a very, very real possibility for many small businesses. The end result of that scenario is more people out of work and more people on unemployment. This will add a greater financial burden for the government via higher unemployment payments. This is not a great result for anyone, if you ask me.
I am not against health care reform as a subject. There are many, many aspects of our health care system that need fixing. They have been discussed and debated ad infinitum and are certainly too long to list here. I have no argument with the concept of fixing the system and some key points have been addressed in the House bill. In fact our Senator from Oregon, Ron Wyden, has proposed some of the most logical fixes of anyone I’ve seen. Unfortunately many of his ideas have been shot down by his own party.
All I am trying to say here is that our legislators better wake up and realize that what has been proposed and passed in the House will very likely be detrimental to large numbers of small businesses and could very easily increase the number of people out of work.
As the House bill is not the final version that will be the ultimate law (the Senate has to pass its own version, then the two bills need to be merged), it is not too late to fix this aspect of the legislation. In fact, per this article, the Senate version seems much less onerous to small businesses.
This legislation will affect you in some way. It’s not too late to let your voice be heard. It is easy to send an email or fax to your Congressman or Congresswoman or Senator. I encourage all Silkin Management Group clients to be proactive and do so.
Larry Silver
President, Silkin Management Group
For more information about Silkin Management Group visit our website at:
www.silkinmanagementgroup.
You can also email us at:
info@silkinmangementgroup.
Visit our other blog at:
blog.silkinmanagementgroup
My interest in following this legislative process is two fold: how will this affect our clients at Silkin and how will it effect the management of my company? The House bill is not an exciting prospect for either. The best summary of this I found in an article on November 9th in the Wall Street Journal. You can access that article here: Small Business Crunches Numbers.
According to the author of this article, “The House bill mandates that employers with payrolls above $500,000 must contribute -- for each full-time employee -- 72.5% of the premium cost for single coverage and 65% of the premium cost for family coverage. The penalty for failing to do so is a 2%-to-6% tax on employers with payrolls between $500,000 and $750,000 and an 8% tax for employers with payrolls above $750,000.”
Essentially then, if you aren’t already paying for health insurance for your employees, which a majority of small businesses aren’t doing because they can’t afford it, you will either have to pay the premiums or get taxed an additional 5% to 8%. I wonder, have any of our law makers stopped and asked the simple question: “If a small business can’t afford the payment now, how are they going to be able to afford this additional mandated cost?” Has anyone stopped and asked, “Where will the money come from?”
Since, in my opinion, most of our lawmakers have never run a business themselves, never had to make payroll week to week or month to month, never had to let employees go in order to cut costs and all the other tough decisions all businesses, very much including the clients of Silkin Management Group, have to make, they just don’t have much reality on what effect their mandate will cause with small business owners.
Let’s keep it simple: if a business cannot afford to pay health insurance premiums now, how will they afford it in the future? There are only two avenues to take to accomplish this: increase of net income to cover the cost, or decrease of overhead. And what is the primary overhead cost of Silkin clients and most small businesses? Payroll.
During the tough economic times we are in, most small businesses are not growing enough in net income to afford this additional cost. Although by the last survey we did, our average Silkin client’s production is growing even during this down economy, adding this significant cost to their overhead will not be easy. But the majority of small businesses are not growing enough to handle such an expense. What do they do?
Their primary choice may be to lower overhead by getting rid of one or more employee. I think that is a very, very real possibility for many small businesses. The end result of that scenario is more people out of work and more people on unemployment. This will add a greater financial burden for the government via higher unemployment payments. This is not a great result for anyone, if you ask me.
I am not against health care reform as a subject. There are many, many aspects of our health care system that need fixing. They have been discussed and debated ad infinitum and are certainly too long to list here. I have no argument with the concept of fixing the system and some key points have been addressed in the House bill. In fact our Senator from Oregon, Ron Wyden, has proposed some of the most logical fixes of anyone I’ve seen. Unfortunately many of his ideas have been shot down by his own party.
All I am trying to say here is that our legislators better wake up and realize that what has been proposed and passed in the House will very likely be detrimental to large numbers of small businesses and could very easily increase the number of people out of work.
As the House bill is not the final version that will be the ultimate law (the Senate has to pass its own version, then the two bills need to be merged), it is not too late to fix this aspect of the legislation. In fact, per this article, the Senate version seems much less onerous to small businesses.
This legislation will affect you in some way. It’s not too late to let your voice be heard. It is easy to send an email or fax to your Congressman or Congresswoman or Senator. I encourage all Silkin Management Group clients to be proactive and do so.
Larry Silver
President, Silkin Management Group
For more information about Silkin Management Group visit our website at:
www.silkinmanagementgroup.
You can also email us at:
info@silkinmangementgroup.
Visit our other blog at:
blog.silkinmanagementgroup