Columbus Dispatch Editorial - Congresswoman Mary Jo Kilroy's Vote In Support of Health Care Reform Will Kill Jobs

Sunday, June 6, 2010  02:59 AM

Last month, the nation’s most prominent small-business association joined in a lawsuit against the health-care overhaul signed into law earlier this year by President Barack Obama. The National Federation of Independent Business concluded that the law will be harmful to small businesses and to prospects for small-business job creation. Small business is the economy’s employment powerhouse, because new jobs are created disproportionately by this sector.

The White House claims that the plan will help small businesses because it includes health-care tax credits for these enterprises, but the NFIB says that the credit applies to fewer than a third of small businesses and the application process is daunting. Worse, the association points out, health-care costs are permanent, but the tax credit lasts only six years. The group also predicts that new taxes contained in the overhaul, such as one imposed on health-insurance companies, simply will be passed along to small businesses in higher health-insurance costs.

A study by the National Center for Policy Analysis says that because the tax credit decreases as a small business adds employees, it creates a disincentive to hiring. Others have pointed out that the law requires any employer with 50 or more employees either to provide health coverage or to pay a penalty. This could deter small employers from increasing their work forces and could induce some who are just over the 50-employee threshold to cut workers in order to get under it.

As for Big Business, a Forbes magazine analysis shows that the overhaul creates billions of dollars’ worth of incentives for large companies to dump employee coverage altogether, which could send hundreds of thousands of employees turning to the federal government — the taxpayers — to supply them with subsidies to buy health coverage. For example, last year, it cost AT&T $2.4 billion to cover 283,000 employees. By dropping coverage, the company would save $2.4 billion and face only $600 million in federal penalties for doing so, for a net gain of $1.8 billion a year.

Finally, benefits consultant Towers Watson surveyed 661 large companies in May and found that 94 percent expect the overhaul to raise their costs, 88 percent expect to pass them along to employees and 74 percent expect to cut health benefits.

All of which adds to the evidence that this was not a rational attempt to solve the nation’s health-care problems but a bill forced through Congress for political reasons and justified with fraudulent accounting and false promises. It is poised to unleash massive harm on the nation’s economy.