A Health Care Reform Hole For Medium-Size Businesses

The health-care-reform bill, among its many provisions, does a lotto encourage small businesses to insure their employees. In the Senate version, those with fewer than 25 employees receive tax credits that make insuring employees more affordable. And above 50 employees, companies are slapped with $750 per-employee fines for not providing health insurance. The fines get really hefty—$3,000—for each low-income employee not insured. In both situations, using rewards or punishment, the bill gives businesses serious incentives to get their workers insured.

But what aid goes to businesses in-between, those with 26 to 49 employees? Relative to other, very complex questions about health care, this one has a simple answer: none.

They do not get the tax credits provided to smaller businesses, nor do they have fines assessed like larger companies. "Beyond any kind of added bonus of trying to be competitive, there's not a lot spelled out in the bill," says Molly Brogan, spokesperson for National Small Business Association. "There are not a lot of incentives beyond for businesses this size to go beyond what already exists." For all the groups that health-care reform will reach out to, this is one that apparently gets left behind.

Why has no one made a stink over this? Because the majority of these companies, about 90 percent, already offer health insurance. We're talking about a relatively small population. And that, as Brogan explains it, is why no one really took up the cause. "I don't think we would turn up our nose at incentives," she explains. "But do we think that's the most critical? Probably not." She's much more worried about increasing the availability of insurance at companies with less than 10 employees, where just under half of companies offer plans. Fair enough—but also a pretty raw deal for the Americans who work at these mid-size firms.

In any case, this particular chunk of the bill provides a nice window to consider a question I have received repeatedly, from friends and readers alike: how, after Congress writes a 2,074-page bill and backs it with more than $800 billion, will there still be 23 million or so uninsured Americans? The fact that mid-size companies will be neither required to insure, nor rewarded for insuring, their employees helps provide an answer to this question.

Here's an example to consider: say our friend from the 2008 election, Joe Six Pack, makes an average salary of about $37,000 working for a construction company of 40 or so employees. His employer does not offer insurance before reform and does not have any reason to after the bill passes. In 2014, the federal government will require Joe to buy insurance. He can buy a plan on the exchange that, with the help of subsidies in the Senate bill, works out to $3,626 in yearly premiums ($302 a month). Or, he can pay the $750 fine for not having insurance. Will Joe buy insurance? I'm not certain he will, and sure he would definitely think twice.

Joe is one among thousands in a demographic who will make this calculation. There are other demographics, like the self-employed (population: 1 million at last check). And then there are the employers, who might decide to pay the fines themselves rather than offer insurance. These decisions impact workers. They impact dependent spouses and children. Start adding all these groups up, and you start to get a picture of why millions still remain uninsured after health-care reform passes.