By Chris Taylor
http://stream.publicbroadcasting.net/production/mp3/wkms/local-wkms-915795.mp3
Murray, KY – Some of the initial impacts of the recently passed federal healthcare reform bill are trickling into effect. Now, one of the bill's provisions allows small businesses who provide health insurance to their employees to take advantage of tax credit savings this year. Chris Taylor goes to Boone's Cleaners in downtown Murray to hear how the business hopes to see some savings.
Boone's Cleaners sees some 1,500 shirts and a far smaller amount of dry cleaning every week. The 3-generation business has been doing Murray's laundry for almost 80 years. Brothers Tony and Howard Boone now run the company. Howard says the business was born in the midst of the Great Depression.
Boone- My grandfather started this in 1931 and he starved to death for ten years and finally started making a little money about ten years later.
Now, The company employs an average of 24 workers and offers a co-pay healthcare plan, but Howard Boone says most opt out because they simply can't afford it.
Boone-Our employees make eight to ten dollars an hour and even when we're paying 50%, that extra 50% for them got to be very, very burdensome. Matter of fact they couldn't pull out $200 a week out of their budget and so we only have one or two left that are even part of the program.
Boone says there's no way his company could be profitable and pay all of his employees' premiums.
Boone- It's a pretty dicey game as a business owner of how to do it, how to keep sales up, how to keep people employed. I think what's going to eventually happen is people are going to downsize to the point where they're as lean and mean as they can possibly get.
Despite the still rising cost of premiums, Boone is looking into new potential savings. His company is one of over 51,000 Kentucky small businesses with 25 employees or less that are expected to qualify for a federal tax credit this year.
Public health advocate Jodi Mitchell is the executive director of Kentucky Voices for Health. She says over half of all private employers in the Commonwealth provide health coverage to their workers. However, only four out of ten small businesses offer coverage.
Mitchell- It's just been cost prohibitive for small businesses because they are small. They don't have access to the larger pools that keeps premiums affordable and so this is an opportunity that these small business owners may be able to get more affordable coverage.
Mitchell hopes more businesses will choose to insure their employees; which, in turn, will bring down the number of uninsured Kentuckians last estimated to be about 600,000. The tax credits will reimburse up to 35% of premium costs for the smallest of businesses, or those with ten or fewer employees and will reach 50% in four years. Nonprofit employers can get a 25% credit; and the bigger the business the smaller the amount credited. The new law also lets employers count two half-time workers as one full-time employee to make eligibility a bit more flexible. Mitchell says providing benefits can strengthen a business' competitiveness.
Mitchell- You retain employees if you provide coverage and you have healthier employees. You have more productivity at the workplace.
Howard Boone doesn't know how exactly the tax credits will affect his bottom line, and he has his doubts about another part of the bill set to take effect in 2014. Health Insurance Exchanges.
Boone- I haven't talked to a business person yet that thinks this exchange is going to be any cheaper than what they can get it now. Not one. I hope we're all wrong and that the exchange is beneficial.
Jodi Mitchell says these exchanges are expected to function as health insurance "supermarkets" where individuals and small businesses alike can purchase different tiers of coverage from various insurers.
Mitchell- No one really knows what the exchange is going to look like and a lot of the details have yet to be decided on through the regulatory process.
Kentucky Department of Insurance spokesperson Ronda Sloan says her office is readying to work on the exchanges, already completing some preliminary tasks and now awaits the federal Department of Health and Human Services for further planning and implementation guidelines.
Boone agrees providing employees' health benefits makes for better workers, but gives credence to the other ways to retain them. His company offers retirement packages and generous vacation benefits.
It's likely small businesses like Boone's Cleaners who already have some sort of health plans in place will see some savings from the tax credits; but it's questionable if companies who don't will actually adopt plans if the cost of premiums remain unchanged.