I was riveted to the television Sunday, March 21, for live coverage of the final health care debate. I flipped channels at first, but -- not wanting to miss a word -- settled on C-SPAN. Rep. Cathy McMorris Rodgers, R-WA, was particularly ominous: This legislation will cripple small business and add "oppressive new mandates" that would kill entrepreneurship.
That sounded pretty scary to me because I'm both an entrepreneur and a small businessperson. So this week I've been doing my homework.
As a point of reference, the Journal paid $46,000 last year to cover many of our 18 employees. (A few employees are covered under their spouse's plan.) For that they received some annual checkups and major medical coverage that kicks in after a deductible of $3,000 for an individual, $6,000 for a family.
Here's an example of how well that coverage worked for one employee this year. The company paid $6,600 for his premium. (OK, this employee is not particularly young.) We also paid another $480 into a health savings account and required him to at least match it. The employee paid another $6,000 or so to cover his spouse. Then, a trip to the hospital and surgery resulted in $100,000 in medical bills. Yes, most of the bills will be paid by the insurance company, but the employee is out about $13,000 plus the Journal's $7,000 -- a total of about $20,000. We have a few other older workers who did remain healthy but the cost for those employees and spouses was still up to $14,000, shared by the company and employee.
There were horror stories on the news that said that some unfortunates were paying up to a sixth of their income for health insurance. Well, for some it's closer to a fifth, and the coverage, frankly, is not very good.
So let's look at this new health reform package and what it will mean to this company, our employees and those very close to us.
This year, 2010, the Journal, which has fewer than 25 employees, will receive substantial tax credits for part of the premiums we pay. This money goes directly back into our pockets because we will be paying far less federal tax next year. Also, one of us has a young family member with a big pre-existing condition. This family will no longer live in fear of being maxed out on benefits and dumped by the insurer. This family will now be free to change jobs and that new employer's insurance company cannot deny this child coverage. Also, children age 23-26 will now be allowed to stay on their parents' health plan instead of being booted off. Finally, it's too late for my mother, but those on Medicare will receive a $250 rebate when they hit the "donut hole" gap in drug coverage (currently when they pass $2,700 in costs, they lose coverage until they reach $6,154.)
The following year, 2011, will require us to report the value of health care benefits on W-2s. As an employer, I'm happy to do it. It's the same year that Medicare recipients receive a 50 percent discount on brand-name drugs while in that donut hole. I know a good friend who can use it.
And the year 2012? Programs will create nonprofit insurance co-ops to compete with commercial insurers. I'm looking forward to having more options.
But be careful about 2013. It's the year Medicare payroll tax increases for couples making more than $250,000. (Oh, that's right. I don't know anyone offhand who makes a quarter mil.)
In 2014, when most Americans will be required to have health insurance of some kind, new health insurance exchanges will become available for individuals and small businesses. Medicaid will be expanded to many more low-income people, including low-income childless adults. Most Journal employees would not qualify but some entry-level workers may. And here's some more good news that will help our employees: There will be income-based tax credits for those in exchanges paying for their dependents, available on a sliding scale up to $88,000 income for a family of four.
Finally, by 2020, the Medicare prescription drug coverage gap will be eliminated.
I don't know, Congresswoman Rodgers. I am a small business owner and an entrepreneur. And I am not afraid.