‘Ineffective’ Obamacare Small Business Credit slammed in House hearing

The Small Employer Health Tax Credit was supposed to play the critical role of subsidizing small business as they offered health insurance to employees but results have not measured up, as a hearing in the House showed.

Obamacare / SS&SS, used under Flickr Creative Commons license

WASHINGTON, March 23, 2016 — A program designed to help very small business owners get health care coverage for their employees has underperformed and disappointed, according to testimony given at a recent House hearing.

The Small Employer Health Tax Credit was created as part of the Patient Protection and Affordability Care Act (PPAC), commonly known as Obamacare, and it provided a credit for an employer with 25 or fewer employees if the employer purchased health care for employees.

But in a hearing entitled “Lip Service but Little Else: Failure of the Small Business Health Insurance Tax Credit” held by the House Small Business Committee Subcommittee on Economic Growth, Tax and Capital Access on March 22, the program was slammed as ineffective and underperforming.

“Like so many other parts of Obamacare, it was another case of overpromise and underdeliver,” said Tim Huelskamp, a Republican from Kansas and chair of the subcommittee.

His sentiments were echoed by the ranking member of the subcommittee, Judy Chu, a Democrat from California, who said, “While the credit was estimated to support between 1.4 million and 4 million of small employers, the use of the credit by small employers was much lower than projected.”

The hearing was held after the Government Accountability Office (GAO) report found numerous deficiencies with the program, noting

Claims of the small employer health tax credit have continued to be lower than thought eligible by government agencies and small business group estimates, limiting the effect of the credit on expanding health insurance coverage through small employers.

According to the GAO report, the program has underwhelmed mainly for these reasons:

  • More than half of businesses eligible weren’t aware it existed
  • The credit was normally not enough to offset the cost
  • The reporting requirements for eligibility were cumbersome and time-consuming
  • There was a twoyear sunset on the credit

The PPACA celebrated its sixth anniversary Wednesday.

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