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Donald E. L. Johnson began his financial writing career as a commodities reporter on the floor of the Chicago Board of Trade for The Wall Street Journal. He has reported for the Chicago Sun-Times, New York Journal of Commerce, American Metal Market-Metalworking News and Modern Healthcare, where... More
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The Business Word
  • Baucus Health Insurance Proposal Will Cost Small Employers Millions 0 comments
    Sep 17, 2009 10:44 PM
    The much celebrated and deplored health insurance reform and health spending bill proposed by Senator Max Baucus (D-MT) would impose tremendous administrative burdens on small employers.

    They would have to hire tax experts and accounting firms to help them prepare applications for tax credits and subsidies that Baucus proposes to give to them.

    And, of course, the IRS and the Department of Health and Human Services would have to examine their tax returns and books to make sure that they weren’t cheating. This is because the subsidies and tax credits envisioned by Baucus invite fraud and abuse, and the government would have to try to minimize that. The problem is that the Medicare and Medicaid programs have shown that the Feds aren’t very good at minimizing fraud and abuse, which amounts to some $65 billion a year in the Medicare program.

    Tax preparation services cost as much as the IRS collects in income taxes. It appears that the Baucus plan would cost small employers more in administrative expenses than they would collect in tax credits and health insurance subsidies.

    Wonder whether the Congressional Budget Office has an opinion on this?

    It would be much better to take small employers out of the health insurance business and let their employees buy health insurance in a reformed individual health insurance market.

    Bottom line: Millions of small employers would give up because they couldn’t deal with the health regulations and the costs the Democrats’ health insurance reforms would impose on them. Millions of jobs would be lost, and the government’s income tax revenues from small employers would shrink.

    Sen. Baucus’ Finance Committee will begin debating and marking up a bill next week.

    Link:

    America’s Healthy Future Act of 2009: The Baucus proposal, pp.22-24.

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