Senator Barack Obama Announces Plan to Provide a New Health Care Tax Credit

Release on Obama Health Care Tax Credit

Senator Barack Obama Announces Plan to Provide a New Health Care Tax Credit for Small Businesses
CHICAGO, IL –Senator Obama today unveiled a new tax credit for small businesses that offer quality healthcare to their employees.
Senator Obama will discuss this plan in his remarks to the National Council of La Raza this afternoon and Chairwoman of the House Small Business Committee, Congresswoman Nydia Velazquez and Obama Campaign Economic Policy Director, Jason Furman will detail the plan in a conference call prior to Senator Obama’s remarks.

Barack Obama understands that the skyrocketing cost of healthcare poses a serious competitive threat to America’s small businesses. <1> Small businesses are the drivers of job growth in our economy, creating, on average, more than 2/3 of net new jobs each year.<2> Yet they face unique challenges in providing health care to their employees, including higher administrative costs<3>, lower bargaining power<4>, greater price volatility and fewer pooling options. On average, small firms pay 18% more for health premiums than their larger counterparts.<5> And as health costs have risen, a growing number of small businesses have had to shed their healthcare plans. The recent decline in employer-based health care coverage is almost entirely attributable to the precipitous drop-off in coverage among small firms. The percent of smallest firms that offer health benefits fell from 57% in 2000 to 45% in 2007.<6>

In summary, Senator Obama’s plan will:
Reduce the burden on small businesses in our economy by offering a new Health Tax Credit to small businesses that provide quality health care to their employees. This idea – which has been championed by Hillary Clinton – will help small businesses grow and create good jobs with health care here in the U.S.
The Obama Small Business Health Tax Credit will provide a refundable credit of up to 50% on premiums paid by small businesses on behalf of their employees. To be eligible for the credit, small businesses will have to offer a quality health plan to all of their employees, and cover a meaningful share of the cost of employee health premiums. The credit would be fully available to small firms, and would be phased out for medium-sized firms. It would also be phased out for small firms with high-income employees.

Under Obama’s plan, small businesses will not be required to provide healthcare to their employees or contribute to the national exchange on their behalf. But with the new Obama Health Tax Credit, small businesses will have a strong incentive to offer high quality health care to their workers. For small firms that already offer health insurance, the Health Tax Credit will reward them and make it easier for them to continue providing coverage while remaining competitive. And for firms that do not currently offer health insurance, the Health Tax Credit will give them a generous new financial incentive to begin doing so.
Obama’s Small Business Health Tax Credit will work alongside other aspects of his health care plan to lower costs and improve competitiveness for America’s small businesses, including:
Providing access to a low-cost National Health Exchange: The Obama health care plan will provide small businesses with new opportunities to buy low-cost, high quality health plans for their employees through a national exchange similar to what is offered to members of Congress. This exchange will allow small businesses to get the same benefits of spreading risk and administrative costs over a large pool that larger businesses currently enjoy.

Reducing volatility and lowering costs by offsetting the cost of catastrophic care: The Obama plan will reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold if they guarantee such savings are used to reduce the cost of workers’ premiums. This reimbursement (often called reinsurance) is particularly important for small business plans, which can be overwhelmed by the costs of catastrophic expenditures for even a single employee. Through this provision, the Obama plan will reduce the volatility of premiums and help lower health costs for small employers and their employees.
Reduce costs throughout the health system through up-front investments in health IT, increased insurance market competition, and disease management: The Obama plan will aggressively lower health costs by facilitating broad adoption of standards-based electronic health information systems, and other value-increasing innovations improving chronic care management, and increasing insurance market competition.

The additional cost of incorporating the new Small Business Health Tax Credit into Obama’s his health care plan will be about $6 billion per year. Obama will cover this cost by adopting new reforms to lower federal health care spending. First, Obama will create a pathway for generic biologic drugs, which will increase market competition and lower federal spending on prescription drugs accounting for a growing share of the overall drug market. . Second, to ensure that his new Health Tax Credit does not increase the net cost of his health care plan, Senator Obama will dedicate a portion of savings from reducing disproportionate share hospital (DSH) payments, which can be significantly reduced and restructured in a reformed health system in which all Americans are covered.

<1> According to the National Federation of Independent Businesses, the cost of healthcare consistently ranks as the number one concern of small business owners. http://www.inc.com/news/articles/2008/06/nfib.html.
<2> U.S. Census, various years.
<3> Commonwealth Fund, 5/9/06.
<4> Kaiser Family Foundation, 9/11/07


http://thepage.time.com/release-on-obama-health-care-tax-credit/

and even with a tax credit we would not be able to afford to provide insurance.

Seems more like the average *keep it shuffling while the public is watching* political move. :eyes:

I can't say I am crazy about this plan. I think it should be paid for by a consumption tax, such as a Value-Added Tax, as it done in most other industrial countries. It could be used to fund a single-payer health insurance, or it could be used to subsidize privated health insurance plans, if that is what most people want. The advantage is that the tax would be rebated on everything we export, which would make American business more competitive, and increase jobs.

This just seems like the same as everyone else's offerings. Let's make it LOOK like we're doing something different by putting lots of movement into a system that FAILS the american consumer.

Someone please tell me how this is CHANGE?

As I said in the previous post -- WHERE is the UNIVERSAL health care?

is the nasty habit of insurance companies practicing medicine. I work for a non-profit health foundation, and there have been times our patients have had to pay out of pocket for medications because the insurance company refused to pay for it, insisting our doctor use another medicine, even though that medicine would not be as effective or could even be dangerous for our patients.

My wife and I are both take regular meds for which there is currently no generic alternative, but our prescription drug plan still pays no more than about $5 on a prescription that costs $125/month. They're of course well aware that there is no alternative, they just don't want to have to pay out anything in exchange for all of the moeny they collect in premiums and this provides a convenient fig leaf to allow them to steal their customers' money.

Face it, it's the same across the board with health insurance. I went looking recently for a GP, only to discover that the physicians covered under my plan aren't accepting new patients for six months, so, if I want to see a doctor, I have to pay for it myself. I've been looking for a specialist, but discovered that the only specialists covered by our plan are academics who do research at a nearby hospital and who only accept patients whose specific conditions fall within the extremely narrow range of their research interests, none of which happen to apply to me (or 99% of the other patients in the world). Once again, if I want health care, I'll have to pay for it myself. I don't know why health insurance companies don't just come out and say openly that they plan to take your money and give you absolutely nothing in return. The end result would be the same and at least you could save yourself all of the hours on the phone trying to obtain coverage the insurance "provider" never intended to provide anyway. Better yet, why don't we just skip the middle man and set fire to our money? Then at least we could get some tiny heating benefit from burning it. Don't knock it, it's more than we get from the insurance companies now.

I've been long term unemployed - and purchased health insurance for myself during that period. Why are there no proposwals for tax credits for these folks? If they are depleting their savings to live and still buying health insurance then arguably they too are deserving of some kind of tax credit.

I've also been self employed. If one assumes that this health care tax credit must be taken out of business income earned then this is a laughable proporal. The health insurance costs alone might well make the business unprofitable. Even with a tax credit.

This kind of talk is all smoke and mirrors. It sounds good but it will have very little impact in reducig the number of uninsured.

It's amazing isn't it? The closer we get to the convention, the more *conventional* (IE - NO change) the offerings are becoming.

I'n still waiting to see what ELSE is going to morph into the *same old shit, different day*. :grr:

but thats in combination with eliminating employer-contributions to workers insurance or taxing the workers for any contribution from employers to health care costs. Of course with McCains plan people like him could still be denied health care (ie people who need it due to a current or past condition).

It doesn't really make any small business more competitive.

Small business is the backbone of our economy and should be given even more encouragement than we give the corporate persons.

How does a tax credit help those who are low income or can't be covered through existing plans?

I feel like spitting tacks.

If Obama is elected, there will be a Democratic House and Senate. They will come up with a better plan, and Obama will sign it

91 reps have signed onto Conyers' bill - let it see light.

Physicians for a National Health Program that is for HR 676. It's got a PDF of the bill.

http://www.pnhp.org/publications/the_national_health_insurance_bill_hr_676.php

Short version: The legislation proposes an effective mechanism for controlling skyrocketing health costs while covering all 42 million uninsured Americans (this was introduced in 2003 - since that time, it's upwards of 48 million uninsured). The bill also restores free choice of physician to patients and provides comprehensive prescription drug coverage to seniors, as well as younger people.