Health care reforms's effects on a Twin Cities clinic

If you own a small business or work for one, you should be paying attention to the health care overhaul bills. Some provisions that directly affect small businesses include: tax credits, tax increases and penalties.

To better understand how the complex health care proposals would affect businesses, MPR asked a national health care economist to analyze two small Twin Cities' businesses. (Read the first part with St. Paul's Wet Paint here.)

BHSI is a group of privately-owned mental health clinics in the Twin Cities. Forty-four people work there full time. The clinics provide psychiatry, psychology, and social work, said co-owner and psychologist Susan Arquette.

"We didn't buy these clinics with the idea that we were going to make a lot of money," she said. "We bought the clinics because we really liked each other and the people that we were working with and wanted to preserve something that we valued."

MPR News asked health care economist Jean Abraham to analyze what would happen to BHSI under the reform bills.

Abraham served on the President's Council of Economic Advisors, specializing in health care during the last six months of the Bush Administration and the first six months of the Obama Administration. She's also a professor of health policy and management at the University of Minnesota.

"There are two ways that BHSI will be affected by reform -- the first is that based on an overview of what they're paying it appears that some of their workers would be affected by the excise tax," Abraham said.

This so-called "Cadillac tax" on higher-premium health plans is only in the Senate's health care reform bill. It's actually a tax assessed on health insurers, but it's likely that employers and employees will ultimately bear the cost.

It's a 40 percent tax on insurance premiums that exceed certain amounts: for individual premiums it's anything over $8,500; for family coverage it's $23,000. BHSI has a handful of higher-premium employees.

Interactive

Do you own a small business? Click to find out how the House and Senate bills might affect your business.

Arquette took issue with the idea that her higher-priced premium plans are "Cadillac" plans. She said they're modest plans but higher priced because of age or recent health history.

Abraham said BHSI could also get hit with the so-called "pay-or-play" penalty under the House version of the bill.

"Specifically, under the House legislation, they require employers contribute at least 65 percent toward the total premium for family coverage and 72.5 percent toward the total premium for single coverage," she said.

The money generated from this penalty would help pay for expanding coverage to Americans who currently don't have health insurance. It's also way to encourage businesses to continue providing health insurance rather than have their employees buy government-subsidized coverage. BHSI would face the penalty under the House bill, but not the Senate.

BHSI would be exempt from the pay-or-play tax in the Senate because it has fewer than 50 employees. Psychologist Susan Arquette found that news, that her business could be penalized at all, jarring.

"I was naively assuming that for the most part that we would be among the group of people who are considered small businesses that aren't rich," she said. "It seems if we are in a lot of ways in the group that's being taxed as if we were rich and had excellent benefits which we're not."

She says she still believes access to health care is a human right, but she was hoping Congress could find smarter ways to fund it rather than what appears to be a patchwork.

Health economist Jean Abraham says small businesses need to pay attention to what's in the bills.

"It's going to be important that they take the time to really understand how the different provisions will affect them," she said. "Some small businesses will be made better off; some may have to change and revisit what they do currently in order to comply with provisions and avoid a pay or play tax."

For now the House and Senate bills are just proposals. While it's likely the Senate will pass the latest bill, the two bills would still need to be reconciled into one, which could take at least another month.

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