Small businesses ready for health-care reform


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New health-care reform could help some Iowa City businesses struggling to offer plans to their employees.

For some, providing insurance is no longer an option.

“We offer no health insurance at this time because we can’t afford it,” said Karen Kubby, the owner of Dawn’s Hide and Bead Away, 220 E. Washington St. She noted that she’s uninsured, too.

“It makes me frustrated and sad that the economics are such that I cannot provide that benefit to my wonderful and hard-working employees,” she said.

While 9.5 percent of all Iowans are uninsured, 12 percent of Iowa small-business owners are uninsured, according to the Iowa Policy Project.

The recently signed health-reform law, lauded by President Obama on the University of Iowa campus last week, includes reforms aimed at lessening the difficulties for those similar to Kubby.

One of the most immediate of these changes is a tax credit of 35 percent for small businesses with fewer than 10 full-time employees who earn less than $25,000 per year. The tax credits will be available when the system of American Health Benefit Exchanges is established, which will happen by 2014, the year many of the major reforms go into effect.

The credits will continue to exist for two years at an increased rate of 50 percent to ease the transition. A separate exchange system will also be available for small businesses, which includes the option of combining resources to purchase insurance.

Though she is able to provide health insurance for her employees, Catherine Champion, the owner of Catherine’s, 7 S. Dubuque St., and Cheap & Chic, 105 S. Dubuque St., said it is difficult to do so when faced with increases of at least 20 percent each year.

“We have to make coverage decisions based on cost, as opposed to what is best for employees,” she said.

After each annual renewal of her insurance plan, Champion said, she goes through a process of deciding which benefits to trade according to the higher cost.

“I don’t think that health-care should be so expensive that people can’t afford it,” she said. “It’s your life.”

Mike Brown, the owner of Iowa City Tire, 410 Kirkwood Ave., offers health insurance to his employees, but his business is not immune to rising costs experienced in recent years.

Brown said he has had to raise the out-of-pocket expenses in recent years for employees because of the higher price of insurance. In business for 28 years, he remembers times when insurance was more affordable.

Beyond decreasing insurance cost, some speculate the reform could have other benefits.

Paul Heath, the director of the UI Small Business Development Center, said entrepreneurs, who may be hesitant to leave their job with benefits to start their own businesses, may be more likely to do so if reforms made coverage more affordable.

While many Americans are scrambling to figure out how the new health-care law will affect them, UI political science Professor Michael Lewis-Beck said he thinks the confusion will soon be cleared up.

“Actually, I don’t think it will be as complicated as people say; it will be a lot less complicated than things are now,” he said. “It will all sort out once people find their niche.”

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