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Is health reform's small-business tax credit working?

I can't quite decide whether this article is telling me that the small-business tax cut passed as part of the Affordable Care Act is working, not working, about to start working, or we just don't know yet. On the one hand:

Eager to promote the new small-business tax credit, the government this spring mailed 4 million eligible companies postcards with highlights of the program. The response has been tepid, according to insurance brokers who sell small-group policies. The reason, they argue, is that the credit starts to phase out for companies that pay average annual wages of more than $25,000 or employ more than 25 workers. The value of the benefit declines quickly, so many business owners in high-cost states get no tax break, and those elsewhere often say the credit is too small to make much of a difference.

On the other:

One company that has had success selling policies under the program is Blue Cross and Blue Shield of Kansas City, which launched a marketing push to promote the tax credit when the law was enacted. Although less than a quarter of small businesses in the Kansas City area qualify for the credit, the ad campaign paid off. Blue Cross has sold 227 plans to small businesses in the past three months -- 80 percent more than in a typical three-month period, says Tom Bowser, chief executive officer. Now, Blue Cross affiliates in other states are hoping to replicate the Kansas City marketing strategy -- a combination of print ads, radio spots, and direct mail explaining the program's advantages. The success "is tangible evidence that this legislation is having some effect," Bowser says, "and we're cashing in on it."

And then there's the question of what working is: If fewer businesses than we expected apply for the credit, health-care reform becomes cheaper than CBO thought it would be. On the other hand, that would mean the bill is doing less for small businesses than we'd wanted it to do.

By Ezra Klein  |  August 30, 2010; 3:14 PM ET
Categories:  Health Reform  
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Comments

republicans

THE REPUBLICANS IN THIS COUNTRY ARE LOSERS.

LOSERS IN LIFE.

THEY CANNOT EVEN MAKE IT ON THE VARSITY

IN SPORTS AND ALSO BE ON NAT. HONOR SOCIETY.

I PLAYED ON THE VARSITY IN HIGH SCHOOL AND COLLEGE.

I WENT TO STATE AND NATIONAL TOURNAMENTS

WHILE MAINTAINING A 3.94GPA.

REPUBLICANS CANNOT EVEN COME CLOSE TO THAT.

LIKE I SAID REPUBLICANS ARE LOSERS.

THEY DO NOT EVEN MEET THE MINIMUM STANDARDS

OF BEING A HUMAN BEING.

SO THEY ARE NOT.

THEIR ONLY ACCOMPLISHMENT IN LIFE WOULD BE

SUICIDE.

Posted by: thetruuth | August 30, 2010 3:34 PM | Report abuse

The quick answer. Its working for some but not nearly enough.


As I mentioned when the credit was first announced the biggest problem with it is that its not indexed for cost of living where its needed so you end up with many of us here on the East Coast that won't get anything even though with costs spiking horribly its desperately needed and not available.

Posted by: visionbrkr | August 30, 2010 3:49 PM | Report abuse

Small businesses on the bubble deciding whether to provide their uninsured workers with company-paid health insurance? It's all about the economy. If the economic outlook was better, it would be safe to say that more small businesses would be interested.

The only certainty about the credit at the moment is that it is a windfall for those small businesses which are already providing workers with health benefits.

Posted by: tuber | August 30, 2010 4:12 PM | Report abuse

I know that several states have vowed to fight National Health Insurance. Could that be the reason that participation is lower than expected/

Posted by: msollot | August 30, 2010 4:24 PM | Report abuse

~~~~~excerpt:
Although less than a quarter of small businesses in the Kansas City area qualify for the credit, the ad campaign paid off. Blue Cross has sold 227 plans to small businesses in the past three months -- 80 percent more than in a typical three-month period, says Tom Bowser, chief executive officer.
~~~~~


I read this excerpt as a microcosm of the entire Obama-Pelosi legislative agenda----even though it makes things extremely expensive and unsusatinable, clever marketing by the journalists of several news agencies, they've tricked America into thinking it will all work.

Is there anything Ezra Klein's JournoList propaganda CAN'T DO?

Posted by: FastEddieO007 | August 30, 2010 4:35 PM | Report abuse

Less than a third of the small groups we insure are eligible for the credit. Less than 10% will get the full 35% credit. About a third of the groups who are eligible will get less than a 10% credit. More than half the groups are not eligible because their average salary is too high. We've reached out to agents and groups to educate them about the credit but have not gotten a very enthusiastic response.

Posted by: ab_13 | August 30, 2010 5:14 PM | Report abuse

tuber,

its usually not a windfall for those that offer it. What it is, is a reason, for one year at least, not to change plans to reduce costs. And again that is IF you quailfy. Oh and from my understanding people don't see the credit until they FILE their 2010 taxes. Again, pushing it off.

Posted by: visionbrkr | August 30, 2010 5:16 PM | Report abuse

And then there's the question of what working is: If fewer businesses than we expected apply for the credit, health-care reform becomes cheaper than CBO thought it would be.

Really? In the long term, doesn't it mean less small businesses providing health insurance coverage, and more individuals getting subsidies on the exchanges? Doesn't this make health reform more expensive?

Posted by: jmorton2 | August 30, 2010 5:46 PM | Report abuse

"Is health reform's small-business tax credit working?"

No, it isn't.

Posted by: rmgregory | August 30, 2010 7:12 PM | Report abuse

visionbrkr

Many articles with rl examples like this one around the web.
http://www.staradvertiser.com/business/businessnews/20100716_Mom-and-pops_could_be_in_line_for_tax_credits_via_health_care_reform.html

To see if a particular small business that you know about would qualify, check the url at the end of the article.

Posted by: tuber | August 30, 2010 7:38 PM | Report abuse

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