Business for Shared Prosperity

By Kent Hoover
The Business Courier (Cincinnati), 10/20/08

John McCain and Barack Obama would go in opposite directions when it comes to the employer's role in providing health insurance.

McCain's health care plan would encourage individuals to buy insurance on their own. Health benefits provided by employers would be taxed as income. Individuals would receive a $2,500 refundable tax credit ($5,000 for a family) for health insurance premiums. They would be able to purchase any plan offered anywhere in the country.

Obama, by contrast, would require all but the smallest employers to provide health insurance to their workers or pay additional taxes to the government. Small businesses would receive a tax credit to help offset the cost of health insurance.

Individuals could buy insurance from a national health insurance exchange, which would offer various plans, including a government-sponsored plan similar to the coverage now provided to federal employees.

McCain contends his plan would reduce health care costs by making individuals better health care consumers and by increasing competition among health insurers. Employer-provided coverage would still be an option, he said, and individuals would be able to take their insurance plan with them from job to job.

Critics, however, said McCain's plan would gut the employer-based system, which provides most Americans with their health insurance, by removing the incentive to offer health benefits.

"I don't think politically it's going to be possible to throw off the employer-based system," said John Arensmeyer, chief executive officer of Small Business Majority, a national organization that prefers Obama's approach.

Obama's proposal, however, also would face political challenges, despite Democratic control of Congress.

The economy likely will remain weak when the next president takes office. As a result, a "pay or play" insurance requirement for businesses would be "extremely difficult to push through," said Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council.

And Obama's tax credit likely wouldn't be large enough to enable small businesses to afford the benefit-rich coverage available through his national insurance exchange, Kerrigan said. Obama is "out of touch with how expensive it might be for small businesses," she said.

Still, Kerrigan sees a chance that Congress would create some sort of federal insurance pool and provide small businesses with tax credits for insurance purchases. Comprehensive health care reform is less likely, she said.

"When that happens, that's when you lose people," Kerrigan said.

The financial meltdown, high gasoline prices and spiraling budget deficits also might have made health care reform less urgent than other priorities.

Only 4 percent of small-business owners said health care was the top issue in this election in a survey conducted in September for Discover Financial Services. That compares with 52 percent who said the economy was the top issue. Health care also trailed the war in Iraq, government ethics and corruption and immigration.

Arensmeyer, however, said action on health care can't wait, since fewer small businesses can afford to provide coverage every year.

"This is yet another crisis we need to deal with," he said.

Health Care Priorities

John McCain's plan:

- Would provide refundable tax credit of $2,500 to individuals ($5,000 per family) for health insurance premiums; employer-provided benefits would be treated as income.

- Would allow individuals to purchase health insurance nationwide, across state lines.

- Would work with states to establish a guaranteed access plan for individuals who have been denied insurance because of pre-existing conditions or other reasons.

Barack Obama's plan:

- Would create national health insurance exchange for individuals to buy coverage, including a government-sponsored plan similar to the one offered to federal employees.

- Would provide small businesses with a tax credit to offset cost of health insurance premiums.

- Would require larger employers to pay additional taxes if they don't provide health insurance.

Copyright 2008 American City Business Journals, Inc.