Latest Senate Health Bill Continues to Overlook Plight of Small Businesses

The Small Business & Entrepreneurship Council recently announced that the latest version of the Senate health care bill continues to ignore the plight of U.S. small businesses, and instead burdens them with additional taxes and regulations that will drive business costs even higher.

“Rather than moving in a direction that heeds the concerns of small business, the Senate health bill imposes an even higher tax burden on our sector while retaining other tax, regulatory and compliance measures that will drive business and health coverage costs higher,” said SBE Council President & CEO Karen Kerrigan.

According to SBE Council, the “manager’s amendment” put forward by Senate Majority Leader Harry Reid raises the Medicare payroll tax higher (from 0.5 percent to 0.9 percent), and exposes small businesses in the construction industry to a punishing employer mandate that will cripple this already hurting sector. The bill singles out the construction industry by not exempting businesses in this sector from the “play-or-pay” employer mandate that other firms with 50 or fewer employees are exempt from (although it does exempt construction firms with five employees or less). The latest Reid bill also increases the individual mandate penalty/tax, which will hit the self-employed, and maintains an array of other tax hikes and regulatory requirements that will drive up the cost of health coverage for small business.

Kerrigan said changes to the tax credits aimed toward helping small business are too insignificant to outweigh the cumulative cost load of the overall bill.

“The changes that were added to mollify small business concerns are too minuscule and complex,” said Kerrigan.

SBE Council has urged the Senate to start the legislative process over, and include small business reforms within the core bill. The group has long advocated a national marketplace for health care, robust tax incentives for businesses and individuals, the expansion of health savings accounts, tax parity for the self-employed, medical liability reform as well as support for local and state programs that are helping to deliver health care and insurance to those who lack access. Such market reforms and tax incentives will do far more to cover the uninsured — and at far less cost to taxpayers — than the $2.5 trillion Reid bill, according to SBE Council.

Actuaries Detail Health Care Reform Concerns to Congressional Leaders

The American Academy of Actuaries has detailed concerns for congressional leaders to consider as they negotiate combining the House and Senate versions of health care reform legislation. The actuaries underscored the need to limit adverse selection, whether it is stemming from new issue and rating restrictions or inherent with the current design of a new federal long-term care insurance program better known as the CLASS Act.

“Adverse selection occurs when higher-risk individuals are more likely to purchase coverage while lower-risk individuals are more likely to forgo coverage,” said Cori Uccello, the senior health fellow for the American Academy of Actuaries. “The result is that premiums increase.”

The actuaries said that an effective and enforceable individual mandate will minimize adverse selection resulting from more restrictive issue and rating rules that are included in both versions of health care reform legislation.

“The individual mandate language should be strengthened,” Uccello said. “The viability of health care reform depends on attracting lower-risk individuals. Strengthening the mandate through higher financial penalties and non-financial incentives would increase the likelihood that these individuals will purchase coverage.”

Regarding the CLASS Act, the actuaries continued to express their concerns regarding adverse selection issues that are likely to lead to high premiums and could threaten the viability of the program. The actuaries recommended adding eligibility restrictions to the program to limit adverse selection.

The actuaries also addressed other significant areas of the bills including an excise tax on employer-sponsored coverage, grandfathering provisions and medical loss ratios.  The letter is available at: http://www.actuary.org/pdf/health/differences_jan10.pdf.

Related Links

IBISWorld industry reports:
-Global Direct Life, Health and Medical Insurance Carriers
-Life & Other Direct Insurance Carriers in the U.S.
-Funding (Federal) – Medicare and Medicaid in the U.S.

Strategies in Combatting the Foreclosure Crisis

The long-term effects of the foreclosure crisis are only now sinking in for many communities, as homes languish unattended and property values plummet across entire neighborhoods. But a new report from PolicyLink report, Reclaiming Foreclosed Properties for Community Benefit, is showing how some cities and states are dealing with this second wave of the foreclosure tsunami.

With more than five million mortgages in some stage of foreclosure and more than 15 million Americans “underwater” with homes worth less than they owe on their mortgage, the foreclosure crisis remains a very real threat to countless communities.

“As foreclosed properties fester, communities are reeling from blight, crime, and property value decline,” said Kalima Rose, a report co-author and the Director of the PolicyLink Center for Infrastructure Equity. “Thankfully, some proven strategies are showing communities how to reclaim their housing stock and get their cities back on track.”

With a July 17th deadline looming for cities and nonprofits to apply for nearly $2 billion in federal Neighborhood Stabilization Program funding, the information in the tool is needed now more than ever.

Creating Community Land Trusts

Land trusts have been very successful at securing vacant properties and ensuring they remain affordable for years to come. In Providence, RI, city and state leaders acquired foreclosed properties in two of the hardest-hit areas and put covenants on their sale to ensure they remain affordable for decades.

Marketing Foreclosed Homes and Offering Tax Incentives to Buyers

Some cities with still-functioning housing markets have been able to attract new buyers to foreclosed properties. Boston has a trolley ride to take potential buyers on a tour of foreclosed properties. Los Angeles has hired marketers to tout the benefits of buying a foreclosed home. And other cities are offering low-interest loans or tax incentives to attract buyers.

Increasing the Cost for Owning Vacant Foreclosed Properties

Owners of foreclosed properties are often large investors who are waiting for the market to turn around — and letting their properties fall into disrepair in the meantime. By imposing taxes or fines on properties that remain vacant for more than a year, cities and towns can change the incentive structure and make it easier to sell the property to someone who is willing to fix it and live in it.

Rehabbing or Demolishing Vacant Properties

In Cleveland, community leaders have started a six-neighborhood pilot program to identify properties that can be rehabbed and demolish ones that cannot. Getting new homeowners into salvageable properties and saving the upkeep and repair money on non-salvageable properties reduces the burden for local government. Other cities with excess housing stock and low demand are following suit.