Administration hopes tax time will boost support for healthcare reform

by Julian Pecquet - 03/21/11 7:31 PM ET

The cost of healthcare was seen as the top concern, and many businesses worry the credits don’t go far enough. The credits increase to 50 percent in 2014 for coverage bought on state exchanges but end two years later.

The small business tax credits are “incredibly small,” U.S. Chamber of Commerce member Randy Johnson said Monday in a dueling press call.

“(Only) the very smallest employers with very low-income employees would be eligible and they’re phased out over a couple years,” Johnson said. “Our experience … has been that those small business tax credits are really more of a fig leaf than any help at all.”

Others say that thanks to the law’s insurance exchanges, set to start in 2014, small businesses will no longer have to pay 18 percent more on average than large employers. In addition, they say, the tax credit has the potential to cover at least part of the costs of 84 percent of employers with 25 or fewer workers.

“This is a benefit that has widespread potential impact,” said Small Business Majority founder and CEO John Arensmeyer.

Arensmeyer said fewer than half of business executives recently polled by the group knew much about the credits but one-third said they would be more likely to offer insurance after finding out about them.

Anecdotal evidence suggests the credits have had some effect.

According to Forbes magazine:

• United Health Group, the nation’s largest insurer, had added 75,000 members from businesses with less than 50 employees as of January;

• Coventry Health Care added 115,000, a jump of nearly 8 percent; and

• Blue Cross/Blue Shield of Kansas City reported a 58 percent increase in small businesses buying their coverage within the first month of the law’s enactment.

That last insurer has since soured somewhat, however.

“The longer (the tax credit) has been out in the marketplace, the less appealing it’s been to small-business owners,” BCBS of Kansas City executive Ron Rowe said in an Associated Press article this week.