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Frank Knapp In The Greenville News

The Greenville News

April 10, 2010

Health-care bill will help small businesses

By Frank Knapp Jr.

In a recent guest column titled “Health-care bill will hurt small businesses,” Mr. J.J. Darby of the South Carolina Chapter of the National Federation of Independent Business (NFIB) questions the qualifications of others who say that the national health-care law will be good for small businesses.

As the president, CEO and co-founder of The South Carolina Small Business Chamber of Commerce and the owner of several small businesses, I can tell you that the new health-care law is good for small business.

We now have a law that will decrease the cost of health insurance for small businesses starting this year by making federal tax credits available to those with less than 25 employees. Ninety percent of our state’s businesses have less than 25 employees.

In 2014 the new law also will increase health-care insurance choices and competition when the insurance exchanges are in place. These exchanges will pool extremely large numbers of individuals and employees of small businesses, those with 100 or fewer employees, together for the purpose of making numerous insurance companies compete for their business. This new competition will drive down premiums for small businesses that now have little choice in carriers.

Small businesses with 50 or fewer employees — 96 percent of South Carolina’s businesses fit into this category — will not be required to offer insurance or pay a penalty if they do not. According to the Kaiser Family Foundation, 97.6 percent of our businesses with more than 50 employees already offer health insurance.

While many of the critics of the new health-care law claim that small businesses will be hit with tax increases, the truth is that there are no general tax increases for small businesses. None!

The law does call for individuals to pay a small percentage of their income over $200,000 into Medicare. But the vast, vast majority of our small business owners are not in this category. In fact, in 2007 only 4 percent of South Carolina tax returns had more than $200,000 in personal income that included business or professional income. This might not make lawyers and doctors happy, but it won’t impact most small business owners.

Critics also point out that insurance companies will be required to pay an additional annual fee to help fund the reform and that this cost will simply be passed on to policy holders. But the reality is that the new law requires insurance companies to pay out 80 to 85 percent of their premiums for health-care benefits, something that many do not do now. So insurance companies won’t be able to simply pass on the new fee. Instead, they are more likely to reduce their profits that have increased 428 percent in the past eight years.

With all the good news for small businesses, why do people who are supposed to represent small businesses oppose the new health-care law? Why does our attorney general, Henry McMaster, want to sue the federal government to stop what will be a great benefit to small businesses?

It is obvious that the merits of reform are not really the issue with the critics. The insurance industry and those that make money from being associated with the insurance industry, such as the NFIB, have a vested interest in maintaining the status quo. Politicians have a vested interest in promoting their careers and power.

But small businesses have a vested interest in reducing the cost of health insurance.

So, in South Carolina who does speak for small business in the health-care debate?

The answer is the only general business organization in our state with no financial conflict of interest. The one that has worked with Congress to protect small businesses in the reform efforts while at the same time championing the great benefits in the final bill —The South Carolina Small Business Chamber of Commerce.

Mr. Knapp is the president and CEO of The South Carolina Small Business Chamber of Commerce