The entire nation, including politicians, judges and national
trade associations, study with interest--and sometimes
apprehension--every new California law, initiative and referendum,
for California has long been a bell-weather state. In the case of a
recently released bill regarding universal health insurance, those
who yearn to be their own boss can look to California with
hope.
Why? First, because more than one in four self-employed
individuals and their families in the United States don't
currently have health insurance. Many who go "bare"
can't afford the high cost of premiums; others are gambling
that their medical expenses will be less than what they'd pay
for health insurance. Second, for people with a preexisting illness
or injury, cost is not the only barrier. Being able to get it at
all is an even larger hurdle to following their entrepreneurial
dreams.
Of course, the self-employed aren't alone in having concerns
about the cost of health care. In April, Gallup asked the general
population how worried they are about being able to pay medical
costs for normal health care and found that 42 percent of us are
moderately or very worried compared to only 31 percent who
aren't worried at all. Thus, public support for universal
health care is high: A 2003 Pew poll found that 72 percent of
Americans favored government-guaranteed health insurance for
all.
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But Californians are particularly hard hit by rising health-care
costs, experiencing a 61 percent increase in health-care insurance
premiums from 2000 to 2004. So on May 31 of this year, California
took a step, that while not yet law, would bring guaranteed health
care closer to a reality for every California resident. Senate Bill
840, sponsored by Senator Sheila Kuehl, would create a statewide
health-care system for all Californians. To date, it's passed
the State Senate and is now pending in the House.
If passed, how will this bill affect home businesses? For most,
it will be a godsend, but others with higher incomes may look at
the costs and have the opposite reaction.
First, let's consider what's covered. The bill provides
coverage of almost every type of medical need you have: medical
care, hospitalization, dental care, vision care, chiropractic
treatment and prescription drugs. It's a comprehensive plan
that leaves out only a few things, such as procedures primarily
done for cosmetic purposes and, as you'd expect, payments to
providers that aren't licensed or accredited.
How much would health insurance cost under SB 840? We can't
know for sure yet because it's not specified in the bill. The
bill provides for an elected Health Insurance Commissioner who,
together with a new Health Insurance Policy Board, would set
premiums on a statewide basis.
To give you some idea of what universal health care might cost,
we contacted Senator Kuehl's staff and were referred to a
report released in January, 2005 entitled The Health Care For
All Californians Act: Cost and Economic Impacts Analysis. It
was prepared by the Lewin Group, an organization that's been
analyzing the pricing of health-care options for almost 20
years.
The report calls for a "tax on net business income for the
self-employed of 11.95 percent." We understand this to mean
your business income after business tax deductions, including the
home office deduction.
How might this translate for you? Let's say your net
business income is $30,000. Then your annual cost under this plan
would be $3,585 or about $300 a month, which these days looks like
a bargain. Even with a $50,000 net income, the cost would be $5,975
or about $500 a month, which still looks pretty good. But someone
in the top bracket of $200,000 would be paying a whopping $23,900
annually. Income above $200,000 would drop to a simple 1 percent
surcharge.
Would you have your choice of doctors? Yes, and health-care
providers would receive fair compensation without the
overhead-raising cost of paperwork. Who, then, are the losers if
California adopts universal health care? The predator corporations
that suck money out of our bank accounts and those among the
self-employed who earn the most.
We'll keep an eye on this bill's progress and let you
know what happens.
Authors and career coaches Paul and Sarah Edwards are
Entrepreneur.com's "Homebased
Business" columnists. Their latest book is The Best Home Businesses for People 50+.
Contact them at www.workingfromhome.com.