NASE News

National Association for the Self-Employed Statement on the Patient Protection and Affordable Care Act (H.R. 3590)

The high cost of health care has long been the top concern of our nation's smallest businesses -- the over 22 million self-employed.  Escalating premiums have consistently impeded our country’s job creators from effectively managing and growing their business, while also preventing many prospective entrepreneurs from entering self-employment. 

The self-employed represent 78 percent of all small businesses in the United States. For the past ten years, self-employed businesses have grown faster than all other segments of the business population, contributing close to $1 trillion dollars to our economy in 2007. [Self-Employed and the US Economy- Charts & Statistics] Yet, one‐third of self‐employed individuals are currently uninsured, with cost being the primary reason for their lack of insurance.  Furthermore, 71 percent of self‐employed individuals have gone uninsured at some point in their lives.  Those with coverage have experienced double digit premium increases every year, making it difficult for them to retain insurance.    As we can see, cost is key to the self-employed and thus, affordability is their top priority in health reform.

The National Association for the Self-Employed has been continuously working to educate Members of Congress and the Administration on the needs of the self-employed.  NASE’s objective has been to engage in the debate and be part of the solution.  Our ultimate goal was to incorporate some needed changes into the Patient Protection and Affordable Care Act (H.R.3590) to make the bill viable for the self-employed.  [Health Reform- A Self-Employed Perspective- Charts & Statistics]

The NASE strongly supported the inclusion of Senate Amendment 3013, offered by Senators Landrieu, Lincoln, Stabenow, Shaheen, and Bayh, which would have provided the self-employed with a 50 percent business deduction for their health care costs; an important first step in making the tax treatment of health costs fair for all businesses.  This provision would have provided immediate, bottom line savings on health costs for self-employed Americans.  However, Senate leadership chose to forgo this key amendment and instead focused budget resources on expanding premium assistance for bigger businesses that contribute at least 50% to the cost of group health coverage for their employees. 

Based on a June 2008 NASE Survey, Health Coverage: A Micro-Business Perspective, only 18.6% of micro-businesses (those with fewer than ten employees) are currently offering employer-sponsored health coverage to workers, and thus would be able to access the small business tax credit in H.R. 3590.  Self-employed individuals and workers of small businesses not providing group coverage will have to wait until 2014 to receive any premium assistance to afford health coverage.  To qualify, self‐employed business owners must have an individual household income below $43,320 or a household income below $88,200 for a family of four, and must purchase coverage in the newly created state-based health marketplaces, known as Exchanges.

In addition to the limited premium assistance offered to the self-employed in H.R. 3590, the legislation adds new benefit mandates that will increase the cost of coverage approximately 10 to 13 percent according to the Congressional Budget Office.  New restrictions on deductibles and out-of-pocket costs, in conjunction with required benefits, will curb the ability of the self-employed to make adjustments to their coverage options in order to address cost concerns. 

While we commend the inclusion of market reforms prohibiting insurance rating based on health status or pre-existing conditions, which have long been a barrier to coverage for the self-employed, we feel that not enough has been done in the Senate health reform bill to address the needs of the largest segment of our small business population.  The primary goal of reform should not solely be to increase the ranks of the insured at any cost, but rather to create a stable health insurance market that allows for affordable coverage options to ensure that the chief contributors to our economy are not at risk of facing higher health expenses. Unfortunately, the Senate bill has swung that delicate pendulum between cost and benefits too far, requiring over 22 million self-employed entrepreneurs to purchase coverage at likely a higher cost post-reform.

For this reason, the National Association for the Self-Employed must oppose the Patient Protection and Affordable Care Act (H.R. 3590), and we urge Congress to refocus their efforts on ensuring that America’s self-employed and micro-businesses have a health reform plan that provides them with tangible, bottom line relief from high health costs.