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For Small Businesses, Health Care Reform Increases Coverage, Group Says

When House Republicans hold a vote to repeal health care reform this week – a vote that is widely regarded as political theater more than an actual attempt to repeal the law – there will be at least one group of small business owners who will decry the move.

The Small Business Majority, a Sausalito, Calif.-based small business advocacy group, has released the results of a survey that found that health care reform legislation will result in more small business owners providing health care coverage for their employees.

Specifically, the small business tax credit (a provision allowing businesses with fewer than 25 employees that have average annual wages under $50,000 to get a tax credit of up to 35 percent of their health insurance costs beginning in tax year 2010) and the insurance exchanges (online marketplaces where small businesses and individuals can band together to purchase insurance starting in 2014) were named as the driving forces behind an increasing number of small business owners’ decisions to provide health insurance.

The survey, which was conducted in November and includes input from 619 small business owners, paints a picture of small business’ support of health care reform that differs greatly from other small business organizations.

The National Federation of Independent Businesses, for example, is encouraging its members to “Urge Congress to Repeal Job-Killing Health care Law,” on its website’s home page while the National Small Business Association is playing it down the middle, attacking perhaps the most universally detested aspects of health care reform, the 1099 reporting law.

The Small Business Majority, which bills itself as a small business advocacy group that uses scientific research to back its positions, is focused on pushing for health care reform, clean energy policy and job creation and tax credits.

The organization has worked with Massachusetts Institute of Technology economist Jonathan Gruber to project the effects of three different health care reform scenarios on small business profits, jobs and wages. The analysis found that compared with no reform, the scenarios would dramatically improve the overall situation for small businesses—holding down health care cost increases, saving jobs, preserving wages and bolstering, the organization’s website said.

Here are the other key findings of the recent health care survey:

  • One-third (33 percent) of employers who don’t offer health insurance said they would be more likely to do so because of the small business tax credits.
  • 31 percent of respondents — including 40 percent of businesses with three to nine employees — who currently offer insurance said the tax credits will make them more likely to continue providing insurance.
  • One-third (33 percent) of respondents who currently do not offer insurance said the exchange would make them more likely to do so.
  • The same is true for those businesses who already offer insurance, with 31 percent responding that the exchange would make them more likely to do so.

Understanding health insurance reform seems to be the biggest problem facing small business owners right now, according to the survey. Most respondents are not familiar with the exchange or the tax credits, with only 31 percent of respondents saying they understand what the exchanges will do and 43 percent saying they are familiar with the tax credits.