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Businesses brace for health bill's costs

Business Management

Small companies worry about potential increases to their premiums.

Wall Street Journal Online | December 23, 2009

Companies are alarmed at potentially costly provisions in the Senate health-care bill, many of which they hope will be scrapped during a final round of negotiations early next year.

 
A scramble to massage the hefty measure, instead of pushing to kill it, reflects the view of many in the business community that a sweeping remake of the U.S. health-care system now appears inevitable.
 
The U.S. Chamber of Commerce is among a few big business groups calling for Congress to scrap the overhaul effort.
 
Business is worried that President Barack Obama's push to extend coverage to millions more Americans will raise the burden on employers. Business groups have widely criticized the 2,074-page Senate bill, which looks set for passage on Christmas Eve. They also have offered a variety of fixes.
 
 
The legislation's scale and complexity, plus uncertainty over how the Senate bill will be meshed with the version that passed the House in November, make it difficult for most companies to gauge the effect it will have on the bottom line.
 
"We're still committed to the notion that health reform can be done right, but I know of no company that is warmly embracing what is in either the House or Senate bills," said Paul Dennett, top health-care adviser to the American Benefits Council, an advocacy group for large employers.
 
With all eyes now turning to House-Senate negotiations over a final bill expected next month, corporate lobbyists are jockeying for modifications that will buffer the impact.
 
Retailers want a longer delay before new employees qualify for company-subsidized benefits. Big employers such as Caterpillar Inc., Boeing Co. and Xerox Corp. want to modify Medicare tax provisions in the Senate bill that would cut their earnings. Small construction companies want an exemption from employee coverage that the Senate bill already applies to other businesses with fewer than 50 employees.
 
Across the spectrum, businesses worry that a series of new taxes and fees to pay for expanding health-care coverage will push up premiums, particularly for smaller employers.
 
The Senate bill calls for a nearly $70 billion tax over 10 years on insurance companies, plus a $2 billion-a-year tax on medical devices. Billions of dollars are also meant to be raised from added taxes and fees on wealthier seniors, higher-end insurance plans and tanning salons.
 
Companies of all sizes have been increasingly burdened by health-care costs, which topped $400 billion in 2007, according to data from the Employee Benefit Research Institute. Unrestrained, that figure is expected to double by 2017. About 70% of workers receive health insurance through their employers.
 
Groups representing smaller businesses say the threat of increased taxes and premiums could outweigh provisions intended to limit the impact on small employers. The Senate bill "will not only fail to reduce and control the constantly climbing health-care costs small-business owners face, but it will result in new and greater costs on their business," said Dan Danner, head of the National Federation of Independent Business.

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