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.
August 30, 2010; 3:14 PM ET
Categories: Health Reform
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