October 29, 2009
In response to the release of the House of Representatives Affordable Health Care for America Act today, National Association of Manufacturers (NAM) President John Engler issued the following statement:
When the health care debate began early last year, the NAM believed reform would enable employers to continue offering flexible, generous health benefits while decreasing manufacturers' costs. Ninety-seven percent of NAM members voluntarily provide health benefits to their employees and have expressed a continued desire to do so.
We believe that funding for reform should be paid for by reducing health care costs or by generating additional funding through the current health care system. But the newly released House bill instead calls for a 5.4 percent surtax on incomes over $500,000. Nearly 70 percent of manufacturers are organized as S-corporations or other entities that pay taxes at the individual income rate. A tax on small businesses is not health care reform and will harm the economy.
Manufacturers get hit especially hard by these tax increases because of the intense capital demands of modern manufacturing. A small manufacturer's revenue is not take-home pay. It is the money needed to expand plants, invest in equipment and provide benefits—including health insurance.
Adding a surtax onto individual rates that are already expected to rise means that federal tax rates will skyrocket to nearly 50 percent for these manufacturers (with state taxes adding even more burden). These new taxes will have massive negative consequences for manufacturing which has already lost 2.1 million jobs in this recession.
Manufacturers are also concerned about the proposed "public option" included in the House bill. This government-run, taxpayer-subsidized health care plan will threaten the private coverage manufacturers offer to their employees. A public option will either force private competitors to lower costs by reducing coverage or drive them out of the marketplace completely. This would make it difficult for employers to continue to offer the same benefits to their employees.
Furthermore, premiums will increase because more people will be in plans that pay doctors and hospitals at lower, government negotiated rates, which will ultimately cause a shift in costs to private insurance payers.
Our nation is desperately struggling to recover from a steep economic downturn and unemployment continues to hover close to 10 percent. We urge Congress to consider the heavy burdens it will be placing on small businesses and employers with this bill.