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There's a lot of confusion over how the proposed health care overhaul would affect the financial bottom lines of small businesses. 

Small businesses are a major driver of the U.S. economy, and MPR asked a national health care economist to analyze the impact of the proposed changes on a Twin Cities business. 


First a disclaimer: There's no way we can analyze how health care reform would affect each small business because each business is different -- what it sells, how it sells, and where it sells. 

But what we can do is shed a little light on how the House and Senate bills would affect some categories of small businesses. For example, businesses that employ 25 or fewer workers. 

One such business is Wet Paint in St. Paul. Owner Beth Bergman says she employs 16 people. (

Read the second part of this series with Twin Cities-based BHSI here

"It's an art supply store on Grand Avenue and we've been here for 26 years," she said.

To analyze the health care bill's effects, MPR News asked health care economist Jean Abraham to take a look at Wet Paint. Abraham served on the President's Council of Economic Advisors specializing in health care during the last six months of the Bush Administration and the first six months of the Obama Administration. She's also a professor of health policy and management at the University of Minnesota. 

Abraham analyzed what the reform bills would mean for Wet Paint and found that Bergman's business will gain under health reform:

"They currently offer health insurance to their full-time workers, and they are of a size that would qualify them for some additional help in the form of small firm tax credit of up to 50 percent off the employer contribution that they currently pay."

For Wet Paint, a tax credit like that would be in the ballpark of $30,000. Under the House bill, the credit might be in the $20,000 range. 

The House and Senate bills offer tax credits to small businesses that have 25 or fewer full-time employees and which pay average wages of less than $50,000 per year. The bills have different timelines for the tax credit amounts, when they take effect and how long they last. 

There are a couple of reasons for the credits. First, Congress wants small firms that currently offer health insurance to continue doing it. Lawmakers also want to keep coverage affordable.

Abraham's research finds that small businesses pay an average 30 percent more for coverage than large businesses. 

That's something that doesn't surprise Wet Paint owner Beth Bergman.

"I think the system is balled up, and I'm not going to turn down a tax credit," Bergman said. "But I don't know, is this money going to pay for another person I have to hire to take care of the paperwork processes? I guess I could jump up and down because I'm getting a tax credit."

If Bergman sounds less than enthused about receiving a potential tax credit it's for a couple of reasons. The House bill's tax credit would last only two years and not start until 2013. 

Bergman said she is disappointed that health care reform didn't move to a single payer system or provide a public option that she hoped would take her out of the business of providing health insurance. She says it's not an issue of money--she believes everyone should have good health care, and she'd rather pay her employees more--but she doesn't think her employees' health insurance is any of her business.

"I don't have anything to do with my employee's politics. I don't have anything to do with their religion. I don't have anything to do with their sex life," Bergman said. "I don't think I should have anything to do with their health care."

There's another part of reform that may help small businesses with insurance paperwork. One of the major provisions calls for state-based health insurance exchanges. 

Under the exchanges, the government or a non-profit would act like a kind of human resources manager and provide employers with a website that would list available health plans based on prices, standards, and quality.

Gallery

Elizabeth Stawicki

Author

Small businesses are a major driver of the U.S. economy, and MPR asked a national health care economist to analyze the impact of the proposed health care overhaul on a Twin Cities business.

The health care overhaul's effects on one Twin Cities small business

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