In Maine, Obama touts tax credits for small biz health insurance

Mike Miliard, Editor, Healthcare IT News

President Barack Obama spoke in support of his landmark health reform in Maine Thursday afternoon, touting a new course that, after "a year of debate and a century of trying," has become the law of the land.

It will "build on the system of private health insurance that we already have," he said, making coverage "more secure and more affordable" for those who already have it, and allowing those who don't have coverage to "finally be able to get it."

At the same time, Obama said "this reform will not solve every problem with our healthcare system."

"It will not bring down the cost of healthcare overnight," he said. "We'll have to make some adjustments along the way. But it represents enormous progress."

And contrary to the fire-and-brimstone rhetoric blanketing the news of late, the president insisted that the reform is "a middle-of-the-road solution to our healthcare problems."

The president's speech was primarily about tax breaks that will allow small businesses to provide coverage to their employees. He spoke, for instance, about Bill Milliken, the owner of Market House Coffee and Maine Beer and Beverage Corporation, both in Portland.

Milliken "wants to give his part-time employees health insurance and more hours, but he can't afford to do both," said Obama. "This tax credit will make it easier for an employer like Bill who wants to do the right thing by his workers. Starting now, small business owners like Bill will have the security of knowing that they can qualify for a tax credit that covers up to 35 percent of what they pay for their employees' health insurance. Starting now, small business owners that provide healthcare to their workers can sit down at the end of the week, look at their expenses and begin calculating how much money they're going to save."

Savings forecast

The Council of Economic Advisors estimates that 4 million small businesses are eligible for the small business healthcare tax credit if they provide healthcare to their workers. Qualifying firms must have less than the equivalent of 25 full-time workers (e.g., a firm with fewer than 50 half-time workers would be eligible), pay average annual wages below $50,000 and cover at least 50 percent of the cost of healthcare for their workers.

Effective immediately, the credit can cover up to 35 percent of the premiums a small business pays to cover its workers. In 2014, the rate will increase to 50 percent.

Firms can claim the credit for up to six years, consisting of 2010 through 2013 and any two years after that. Both small for-profit businesses and small not-for-profit organizations are eligible. By 2019, the Congressional Budget Office estimates that the credit will save those businesses $40 billion.

Beyond the benefits to small business and their employees, Obama promised that, with reform, "costs will come down for ... the federal government, reducing our deficit by more than $1 trillion over the next two decades."

Reports are conflicting as to whether those projections will be borne out. But having specified what he sees as the short- and long-term financial impacts of healthcare reform, Obama also discussed the medium-term ramifications.

"In 2014," he said, "each state will set up a health insurance exchange, a competitive marketplace where uninsured people and small businesses will finally be able to purchase affordable, quality insurance. In other words, they'll be part of a pool, and get the same good deal that members of Congress get for themselves. That will happen in the next few years.

"And when this exchange is up and running, millions of people will get tax breaks to help them afford coverage – credits that add up to the largest middle class tax cut for healthcare in history," he said.

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