Hi Everyone

Well it has been a few months since my last newsletter and boy do we have a lot to report. While our last edition concentrated on the impact of the COBRA ARRA legislation this issue will try to outline the changes President Obama’s Administration is considering and how those changes will affect small and mid-sized business.

While I have strong opinions regarding socializing the American Healthcare system, this is not a forum for Joe Cortelli’s personal opinions. This is a newsletter that will focus specifically on employee benefits and the impact the Obama plan may have on your business.

On the right are the core items of Obama’s plan as they relate to small and mid-sized companies. While nothing is set in stone are the main areas being discussed.

Joseph Cortelli
Nexus Benefit Consulting,

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1- Elimination of the tax deductibility for employees. Probably the most significant and beneficial rule for employee is that medical benefits premiums are not subject to taxation. Obviously, this gives employees with health insurance greater buying power and richer benefits than they might afford without that deduction. While “leveling the playing field for all” might be a noble aspiration, small business in NY and NJ will likely see the greatest fall out. Since we pay a higher tax rate and the cost of health insurance in this area is significantly higher a change like this will certainly make it harder to compete. This may work in Nebraska but in our area the issues are much more complex.

2- Elimination of the tax deductibility for employers. It is my opinion that if a company no longer receive a tax advantage for offering this benefit the benefits currently offered, those benefits will be eliminated for most or severely degraded at minimum.

3- Creation of a public program to compete w/ an employer’s privately funded program. This is a really terrible idea since this could possibly create a “death spiral for your current program.” If the government offers your employees a less expensive program that is subsidized by the government this could lead to many younger employees leaving a private company plan leaving an employer with the sickest employees. A death spiral is created when there aren’t enough “healthy” employees paying into a program to help the sicker among us. I suggest that the government should have the opposite approach. The sickest among us should be offered a public program! This would help our small business’ offer benefits at competitive pricing!

4- Creating a national pay scale for treatment. All pediatricians would be paid the same rate for procedures. Who will set that rate? Will a pediatrician in Manhattan get paid the same rate as Albany?

5- Administrative overhead. A number of ideas have been floated to drastically eliminate or reduce the overhead costs associated with Health Insurance. Nexus firmly believes that there are too much extraneous administrative costs associated with the delivery of healthcare for business but we believe that sales, service and delivery all have a place in a good healthcare system. We think an overhaul is needed but completely eliminating the broker system would be a mistake. Where could this be heading? If you need an idea, swing by your local DMV to see what your experience may be when you experience a claims issue’s in the future.

Please be advised that Mr. Obama has declared this area his main focus for the next 100 days and we expect to see a prototype program rolled out by September. Regardless of your affiliation, please stay informed of these important changes and makes your voice heard. While finding a solution to the ever increasing costs of healthcare and un-insured will be our legacy we believe that these ideas will only increase the hurdles for small and mid-sized companies.


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