Small business to benefit from plan

Published 7:15 pm Sunday, June 8, 2008

By Staff
More than 90 percent of all businesses in Alabama are small businesses, and the majority of Alabama's workers are employed by small businesses. So when rising health care costs threaten to hurt small businesses and their employees, it has a major impact in communities across Alabama.
Fortunately, action is being taken that addresses this challenge. A proposal I've encouraged the Legislature to pass for several years was approved during the special session. This proposal provides help for small business owners and workers so they can afford health insurance. It will benefit not only small businesses and those who work for small businesses, but our Alabama economy as a whole.
Here's how it works: owners of small businesses with fewer than 25 employees will be able to deduct 150 percent of the amount they pay for health insurance premiums from state income taxes. Employees of small businesses who earn less than $50,000 a year will be able to deduct 150 percent of the amount they contribute toward their health insurance plans from their income taxes.
This proposal will help small businesses lower their health care costs and also encourage more small firms to offer health coverage to their workers. That way health insurance becomes more affordable for small businesses and the number of Alabamians with health care coverage will increase.
It's no secret that health insurance costs have risen dramatically during the past decade. There are a lot of reasons for the increase in these costs, including over-utilization, the cost of prescription drugs, an aging population and unhealthy lifestyles.
But whatever the reasons behind the increase, the result is especially difficult for small businesses to cope with.
While small business owners are committed to their workers, some have told me the high cost of health insurance is the biggest obstacle to offering health care benefits to their employees.  Those who do offer benefits have told me they may have to cut back, or drop entirely, their benefit plans because costs keep going up. Others said they could hire more workers if they weren't having to spend the money instead on matching these escalating costs.
When small businesses can't invest dollars in growing their companies, our entire economy suffers. Thanks to this far-reaching legislation, help is on the way.
With this one proposal, we confront three problems in a smart way. First, we make health care affordable. Second, we reduce the number of Alabamians who don't have health insurance.  Third, we strengthen Alabama's economy by helping small businesses.
We are a state that gives a lot of attention to large national and international corporations and rightfully so, in my view.  Alabama has a clear record of outstanding success when it comes to attracting large companies and the thousands of jobs they create.  But we cannot forget that small businesses are just as important.  These entrepreneurs drive innovation and job creation. They offer support to many local activities, such as sponsoring Little League teams and charity events. It's never made sense to me that the state will provide incentives for large companies locating here, but doesn't do enough to help our small businesses.  
This new law is a common sense way to help Alabama's small companies and to increase the number of Alabamians with health insurance.  That helps build a better future for all of us.
Bob Riley is Alabama's governor.