In addition to asking candidates for our Top 100 MostInfluential People in Accounting their opinions on IFRS and convergence, weasked:
"What effect will this year's health care reformlegislation have on business and the U.S. economy?"
All the candidates' responses -- insightful, and oftenpassionate -- are included below.
The immediate impact is already being felt. Uncertaintyin terms of how reform will impact businesses has already resulted in delayedbusiness decisions, including hiring for small businesses, which will alsolikely be a factor delaying recovery. Though there are many points ofdistinction with the federal legislation, Massachusetts' health care reform andits impact on business offers a view into the future, and possibly somelessons, for federal health care reform. Most notably, reform has had nopositive impact on the high cost of health care delivery in the Commonwealth --costs here have risen faster than the rest of the nation since 2006.
As a result, small businesses are dropping coverage,leaving more people to apply for the state's public health plan. The net resultis that the cost of reform is exponentially higher than originally estimatedand, as a result, is contributing significantly to the budget deficit in mystate. To address this, the state continues to look at new sources of revenue-- primarily through increased taxation, which will further slow recovery.
-- Mark Albrecht, CEO, XCM Solutions
Employers: All employers will have to decide whether itis better to continue to provide health insurance for employees or to pay afine and have employees purchase their own insurance through the new healthinsurance exchanges. Since the fines are relatively low, there may be moreemployers dropping health coverage for their employees than adding coverage,which is a bit counter to the intent of the health care reform law. There willbe much analysis on this between now and 2014, when the individual coveragemandate takes effect.
Insurers: Insurers have a tremendous amount of work todo, since they have not traditionally sold policies to individuals and thehealth insurance exchanges are a new concept. They will also have to make a lotof changes to their administrative processes, pay additional taxes and respondto greater scrutiny over their operations.
Health care providers: The impacts to providers willvary, but as whole, are expected to be negative. Providers will be forced toshow that they are delivering high-quality care or they will see theirreimbursement cut.
State governments: Much of the burden for implementingthe new law rests with the states. The states must set up health insuranceexchanges, administer new programs, qualify more constituents for Medicaid andmany other initiatives at a time when budgets are being cut and tax revenuesare falling short. Hence, many states are challenging the constitutionality ofthe new law as it interferes with states' rights.
Taxpayers: The new health reform law does not have anyproven and mandated approaches to controlling spiraling health care costs.Health care costs are expected to continue increasing and will be a growingstrain on the American people and the businesses that operate here. Withoutcontrolling the growth in health care costs, it will be nearly impossible forthe federal government to cut the deficit and reduce the national debt burden,so there remains a looming fiscal crisis that is not being addressed by the newhealth care reform legislation.
-- Charles Allen, CEO, Crowe Horwath LLP
In the short term, the reform will probably have littleimpact as many of the core provisions such as increased taxes on higher incometaxpayers do not take effect until 2014.
-- Jordan Amin, Chair, National CPA Financial LiteracyCommission, AICPA
I simply do not know, and I am not sure many peoplereally know. I do believe it will lead to more consolidation in health care andwill most likely have significant implications as to what segment of theeconomy bears more or less cost.
-- Rick Anderson, Chairman and CEO, Moss Adams
The Patient Protection Act and the House ReconciliationAct fundamentally alter the health care system for individuals and employers inthe following ways:
-- The bills push the U.S. closer to universal coverageby requiring all individuals not covered by Medicaid or Medicare to obtainhealth care coverage or to pay penalties.
-- Employers electing not to offer qualifying coveragewill be subject to penalties. Certain small businesses are exempt.
-- Although many of the provisions don't apply until2014, certain small businesses will get credits in 2010 for buying insurancetoday.
-- To help individuals and small business pay for thesenew requirements, the bill offers tax credits to cover premiums. The costs ofincreased coverage will be paid for by a series of new taxes and fees onindividuals and businesses.
-- Higher-income individuals will be subject to increasedpayroll taxes and new taxes on investment and passive income, includinginterest, dividends, capital gains and royalties. Generally, the new taxesapply to individuals with income of more than $250,000 annually.
-- Individuals with expensive health care plans -- or"Cadillac" plans -- will be required to pay a significant excise tax.
-- Additional changes to the current bills are likely tobe passed in the coming months.
Although many parts of the legislation will not takeeffect for years, some companies have already anticipated the massive,immediate charges they will incur due to the increase in costs. In addition,there is speculation that business will stop providing health care for itsemployees, not only to relieve themselves of the added expenditures, but alsobecause the government will provide it to their employees.
However, the final ramifications remain unknown, aspolicy changes are being considered before the full legislation goes intoeffect. Until then, companies and individuals alike continue to watch withbated breath.
-- C.E. Andrews, President, RSM McGladrey
While it is too early to really have a good idea on theimpact of the health care reform legislation on businesses and the U.S.economy, there are some positive talking points about the legislation.
-- It would make insurance more affordable for small businessand their employees.
-- There could be a tax credit for small businesses.
-- Better health care could mean a more healthierpopulation, thus making U.S. workers for productive
-- August Aquila, President and CEO, Aquila GlobalAdvisors
We have many clients in our health care practice and theyare all quite concerned and interested in the economic effects of health carereform. Generally, businesses are going to have to supply more financialsupport under the legislation, and small to medium-sized entities will beparticularly impacted. While insurance pools and other cost-cutting deviceswill level the playing field somewhat, the bottom line will be affected for allbusinesses. The businesses of the United States have a great tradition ofproviding for the health of workers, but the costs have risen to the pointwhere the burdens need to be shared across the public and private sectors andthrough new, creative insurance mechanisms. I believe the reform legislationattempts to provide for this, but it will be up to business to get creative andfind new ways to spread the impact of health care costs.
-- Andy Armanino, CEO and managing partner, ArmaninoMcKenna
The health care reform legislation will have a verysignificant impact on firms and their business clients, and the overall U.S.economy. Clients will look to their CPA firms to help manage these changes, andit will be critically important for firms to leverage technology tosuccessfully manage this dynamic environment for their clients.
-- Erik Asgeirsson, CEO, CPA2Biz
Until the implementing regulations are finalized andbusinesses adjust to the new requirements, it is premature for me to speculateon the effects.
-- Robert Attmore, Chairman, GASB
Very negative, as it injects uncertainty and risk intothe private sector, the same environment FDR created in the 1930s thatprolonged the Great Depression. I agree with P.J. O'Rourke of the CatoInstitute: "If you think health care is expensive now, wait until it'sfree."
-- Ron Baker, Founder, VeraSage Institute
With U.S. health care spending at about 17 percent ofGDP, clearly the changes will have a dramatic impact on the U.S. economy. Andwithout getting into my personal opinion of the legislation and government'sposition in the health care business expanding beyond what exists today, theimpact may be felt more on midsized and small businesses than planned. And thelegislation can get very complex with respect to record-keeping. Financially,businesses of more than 50 employees without health coverage may be exposed to$2,000 per year per full-time employee between 30 and 50 employees if anyemployee is subsidized. And businesses with more than 200 people that offerhealth insurance will have to automatically enroll their workers in the plan.Compliance will be an area where businesses of all size will have to focusattention. At least the effective date is out far enough for businesses to planfor the impact.
In the end, if the legislation lowers the cost of healthcare overall to most businesses, and as a result can lower the percent ofhealth care to our GDP, the U.S. will be more competitive in the global market.And that is a very good thing.
-- Jon Baron, President - Americas, Workflow &Service Solutions, Thomson Reuters Tax & Accounting
Despite its nearly $1 trillion price tag, theCongressional Budget Office predicts the health care reform legislation isexpected to lead to a $143 billion net reduction in federal deficits over thenext nine years. The CBO determined the reductions will come from $124 billionin net reductions from the health care and revenue provisions and $19 billionin net reductions deriving from education provisions. The CBO didn't includepotential costs that would be funded through future appropriations, but withmore than $400 billion in revenue enhancements and new taxes to cover the costof this reform, not to mention tax credits to help offset those costs forindividuals and small businesses, CPAs are going to be busy over the next fewyears educating and aiding their clients on the law's provisions. CPAs inindustry are also going to have to work with their human resources departmentsto ensure their employers are in compliance with the law.
With the Tax Code being a major tool of thislegislation's funding -- higher taxes for high-income individuals and taxcredits for small businesses, the IRS needs the resources to effectively handlethese new obligations.
Other long-term effects? Mandatory health care could leadto a healthier -- and happier --workforce, saving employers costs associatedwith doctor bills, as well as more productive employees.
-- Joanne Barry, Executive director, NYSSCPA
The adoption will have very deep negative consequencesdue to the drag on earnings and capital. Many experts believe that GDP will bereduced from 3.2 percent to 2.0 percent for the long future. A 33 percentreduction in economic growth is enormously negative to job creation, prosperityand ultimate happiness.
-- Tony Batman, Chair, CEO and president, 1st Global
I believe in, and agree with, health care reform.However, I believe the costs to American business have been underestimated andthat these costs could potentially put an unimaginable burden on an alreadyovertaxed and overburdened economy. I think the timing of this initiative ispoor and we should have waited until we were sure the economy was on the mend,and we could see the light at the end of the tunnel with the war in Iraq.
-- Parnell Black, CEO, NACVA
I don't think it can be projected with precision, giventhe piece-meal nature of the bill's components. Probably, health costs willincrease faster, at least due to higher demand through more insureds. Insurancecosts will increase, then, which will also increase the need for subsidies. I'mnot confident the expected savings will be realized, so unless they aresomehow, private and public debt will increase. I know this may be simplistic,but I'm not sure that complexity yields a better answer.
-- David M. Blaszkowsky, Director, Office of InteractiveDisclosure, SEC
We learn more of the hidden provisions of thislegislation on a daily basis. Fewer taxpayers are being asked to contributemore to entitlement programs. The short-term impact may be small to most firms,because they currently provide coverage that exceeds the legislated minimums.The long-term impact to business and taxpayers will be significant. Entitlementprograms are not healthy for entrepreneurship and business.
Most small businesses, including CPA firms, are turningto technology to increase production, rather than increase employment.
-- L. Gary Boomer, CEO, Boomer Consulting Inc.
I don't believe we'll see any immediate impact onbusiness or the U.S. economy resulting from the current year's health carereform legislation. Many, many of our clients are still feeling the effects ofthe recession and many are wondering when they will finally recover. I believethe effects of the health care reform will hit small business hard as many ofthe components begin to kick in during future years. I can only hope that our legislatorswill address the negative impact that this reform will have upon businesses. Ifmany of these future reform components are not addressed, they could stall theeconomic recovery for small business here in the U.S.
-- James C. Bourke, Partner, WithumSmith+Brown
I spent a large part of my career dealing with tax policymatters relating to insurance and managed care. I have seen the health caresystem and all the players impacted by it struggle for far too long. Thecurrent health care reform will fundamentally change the way that U.S.companies operate. The successful integration and communication of changes bycompanies will demonstrate to employees which companies have successfullynavigated the health care reform waters, and which have not.
Smart companies will innovate as they always do toprovide coverage that their employees need and/or expect, while working tooffset the anticipated increased expense and additional regulatory andadministrative reporting requirements.
-- Beth Brooke, Global vice chair, Ernst & Young
The long-term effects should be positive for the economyand government spending. With the poor, underemployed and workers withoutmedical coverage using the emergency room as their primary health careprovider, the cost to communities and the health care system is ruinous. Canadahas had universal health care for a couple of decades and, at least right now,their economy and their government finances are substantially better than inthe US.
-- Robert Bunting, President, IFAC
Health care reform will have a devastating effect on theU.S. economy. The U.S. economy is exceedingly fragile right now. When youcouple the added tax burden on businesses and taxpayers with the cost ofcompliance with a bill Congress did not even read, our economy will suffer.
Health care reform legislation created a substantialnumber of new government agencies in a era where we need more transparency andless bureaucracy.
Until our unemployment numbers decline, our economy willnot thrive. We have too many Americans without jobs, and my fear is thislegislation will put more people out of work as businesses are faced withcomplying with the health care bill._
The U.S. economy is based on free enterprise. Thislegislation defines socialism. Social Security is actuarially bankrupt. Healthcare reform marks the end of the American free enterprise system.
-- Peyton Burch, Director of partner programs, Deltek
Companies are trying to get their hands around the scopeand nature of the additional cost burden. As we in our profession know, part ofthat cost will correlate with the accounting and financial statementimplications. I believe, however, that the more overarching issue or challengeis the impact on the whole environment of uncertainty in which businesses areoperating in the United States. I think there are number of reasons why therecovery has been slow, bumpy, fragile -- and frankly, jobless -- which is ofgreat concern. Until we believe that we're seeing true job growth, we're notrecovering. One of the reasons we're not seeing job growth is that businessesare worried about macro issues such as the national and global economies thatare highlighted in the headlines. However, they're also concerned aboutuncertainty in the tax system and the tax rules, as well as other regulatorychanges.
Obviously, the complex and far-reaching new financialservices regulation has come out. Health care is a major contributor to the levelof uncertainty, and hence to caution over other business decisions, includinghiring.
Overall, I don't think companies (or political leaders,economists or average citizens) are really sure what it means -- how much extrawork, time, cost and fallout lie ahead. It may well be that when this allshakes out, we will all be able to get our arms around it and recognize that itdoes have, in and of itself, a particularly significant effect (positive,negative or both) on business, the capital markets and the national and globaleconomies.
Health care is but one influence on the near future ofbusiness prosperity. In addition, as I write, there is yet the chance thatstate lawsuits challenging the legislation could result in a U.S. Supreme Courtstrike-down.
-- Stephen M. Chipman, CEO, Grant Thornton
Truth is, the immediate impact might not be thatsignificant, since a number of the bill's provisions for businesses don't takeeffect for several years. Still, given the sluggish economic recovery, imposingadditional costs and regulations on our nation's businesses could very wellretard the economic recovery for which we are all hoping.
While I recognize the potential benefits from a socialperspective, I'm uncertain whether or not this legislation and associated costswill represent the best solution to our healthcare challenges.
As a side note -- the 10 percent tax on indoor tanninghas forced me to sit out by the pool a lot more to maintain my bronzedcomplexion. :)
-- David M. Cieslak, Principal, Arxis Technology Inc.
The proposed reforms could help spur entrepreneurialactivity by increasing the incentives for talented Americans to launch theirown companies, and could increase the pool of workers willing to work at smallfirms, especially when taking into consideration that these small companiescomprise 87 percent of the total U.S. private employer base and employ nearly20 million people.
-- Scott Cook, Founder, Intuit
My sense is that the legislation will have short-termnegative impacts on business and minimal impact on the economy. Businesseslearn to adapt quickly, particularly in the longer term. I'm not overlyconcerned about the business impact. As relates to the economy, health carealready is a major impact whether in the form of patients getting a free ridein hospitals and emergency rooms or their being insured at taxpayers' expense.The economy is affected under either scenario. Our country has a social burden,some, and maybe most, of which Americans accept as being compassionate andresponsible. And the cost of our social responsibility is significant. The newhealth care legislation in my opinion did not add significantly to our socialcost. It's already high and will remain so.
-- David Costello, President and CEO, NASBA
I'm not close enough to have a vision of the specifics.But legislation always impacts markets. And the enormity of the legislationwill cause significant market impact. Our profession will see an increase indemand for our services as businesses seek help to sort through the businesschoices and financial impacts.
-- Gale Crosley, President, Crosley+Co.
Quite a bit, and I think it will hit the small-businesssector harder than any other part of the business marketplace. Small businessowners are concerned with many issues, of course, but rising health care costsseem to be at the top of the list. More and more owners want employees to sharethe costs or pay for 100 percent. I see more and more businesses askingquestions about health care reform, only to be faced with confusing answers. Ifthe small-business owner had a greater understanding of this legislation, theycould more accurately help employees understand their own role in how thelegislation affects them personally.
-- Scott H. Cytron, President, Cytron & Co.
I believe it will have a harmful effect. In many cases,it is putting businesses in positions of substantial increased costs in healthcare versus dropping health care coverage altogether. I have one client facingthe possibility of over a million dollar increase in health care for itsemployees, with the only alternative being to drop the plan altogether.Currently, reducing health care benefits by changing benefits is now illegal.This all-or-nothing approach appears to be absurd.
-- E. Martin Davidoff, Founder and firm manager, E.Martin Davidoff & Associates CPAs
It appears there will be significant burden on thesmall-business owner. One example is the new 1099 reporting requirements. TheIRS is already exempting charge card payments, but recordkeeping and reportingmay well become a nightmare for the small businessman/woman.
-- Frank Degen, Government relations chair, NAEA
It is no secret that health care costs are spiraling outof control in this country. On average, we now spend more per person on healthcare than both food and housing. Insurance premiums are multiplying much fasterthan inflation, which prevents economic growth and leaves businesses with lessmoney to give raises or hire more workers. While the quality and availabilityof medical care in the United States remains among the best in the world, it isclear that health care reform was essential to help foster economic growthwhile providing health care to over 45 million Americans who are currentlyuninsured. The Obama administration's health care bill will reduce the numberof uninsured Americans, but is likely to increase health care costs forbusinesses, especially small and family-owned businesses. Additionallegislation and regulations will be forthcoming that will provide clearerinsight into the impact that health care reform will have on business and theU.S, economy in coming years.
-- Bob Dias, Vice president of marketing, CCH
Assuming cost projections, the long-term effects willlikely be negative as the growth of the program cause unsustainable levels ofexpenditures. These could become an ever-increasing portion of our nationaldebt and outpace our ability to pay for it without continued tax increases. Adrag on the economy could result
-- Michael Di Girolamo, Managing director, InvestmentAdvisors Division, Raymond James Financial Services
Mostly negative. The legislation will increase costs evenmore than it would without the legislation. It will either push up businesscosts or encourage employers to cancel insurance and force employees to use thepublic option, thus increasing the deficit. This is likely to create a colossaldrag on the economy over the long term.
-- Anton Donde, CEO, SpeedTax
In the long term, a health care program for all citizensis a good thing. The effects of the complex health care reform legislationrecently adopted will not be determined for several years. As a matter of fact,many significant provisions will not be enacted until 2014. The immediate impactis for business to assess and project the possible scenarios and additionalcosts based on their individual situations and employee relationships. It willbe another balancing act for business and the economy.
-- Loretta Doon, CEO, CalCPA,
I believe that the legislation will have a profound andnegative impact on business, the U.S. economy and the quality of medical carein the United States.
While it is a noble goal to achieve universal coverage,the right way to do this was to fix the structural economic issues in thecurrent health care system first -- which would free up huge amounts of moneyand resources to broaden coverage.
The legislation was instead clearly focused on expandingcoverage, redistributing wealth and pandering to special interests, rather thanon controlling costs or the improving the quality of medical outcomes.
We missed a huge opportunity to restructure the perversefinancial incentives in our medical system -- patients having no visibilityinto the actual costs of their medical care, the current system of minimal orno co-payments further encouraging over-consumption, physicians being paid forthe number of procedures they perform rather than on quality outcomes, andnuisance lawsuits both diverting funds to trial lawyers and encouragingdefensive medicine. This should have been priority No. 1.
The legislation will additionally have massive unintendednegative consequences -- witness today's fury over the dramatic expansion of1099 requirements that was snuck into the legislation by the IRS and that hasnothing to do with health care.
-- Daniel Druker, Senior vice president, Intacct Corp.
It is hard to predict the impact of health care reform onthe U.S. economy. In the short term, there will be uncertainty, and the marketshate uncertainty. Over the longer term, some business sectors will see positivebenefits, while others will see increased costs.
One possible impact of the new health care legislationcould be on mid-term congressional elections. Regardless of your opinion on thenew legislation, it was contentious and will likely be one of the key issuesshaping the next election cycle.
-- Cynthia Fornelli, Executive director, Center for AuditQuality
The U.S. spends a fortune on health care, and yet theoutcomes are no better (in fact, often worse) than countries that spend afraction of our amounts. This year's health care reform is forcing us towardsuniversal health care -- considered a human right, like education, in everyother advanced economy -- which in turn will focus us on efficiency and costs.Overall, the impact on business and the economy will be neutral, as theincreased need for medical personnel offsets job losses elsewhere.
The political gridlock in Washington is a much biggerissue, as the perpetual rancor and uncertainty discourages investment.
-- Christian Frederiksen, Chairman, The 2020 Group
It is difficult at this point to gauge what its effect onthe economy will be overall. Much of this legislation will be implementedthrough the Internal Revenue Service, and TIGTA plans to evaluate the IRS'sadministration and compliance with these provisions of the law, which will bephased in over time. Some, such as the small employer health insurance credit,are taking effect this year. We are already beginning to evaluate theimplementation of certain provisions, and there is much work for us ahead.
-- J. Russell George, Treasury Inspector General for TaxAdministration
I think we're going to have some uncertainty about that,especially for small businesses -- the SHOP [Small Business Health OptionsPrograms] exchanges are in place starting 2014.
-- Ron Gill, CFO, NetSuite Inc.
Personally, I think a personal health insurance modelmore akin to the way we buy our car insurance is better for our nation, but noone asked me. I haven't studied the 2,000-plus-page bill, but speaking as asmall-business owner whose company's health insurance premiums have increased25-30 percent each of the past four years, it seems the impact could be awfulin the short term if insurance companies jack premiums up even more "whilethey can." While the tax credit may help small businesses who can coverthe float, midsized businesses would suffer significantly. Given the number ofcompanies already on the brink of disaster, this forces companies to reducebenefits, limit hiring, and further cut their workforce. This doesn't exactlyimprove unemployment. Companies are already replacing full-time workers withpart-timers, meaning fewer are eligible for employers' insurance plans --counter to the intent of the legislation.
-- Michelle Golden, Founder, Golden Practice blog
There is little doubt in my mind that the mandatesincluded in this far-reaching legislation will have a negative impact on oureconomic growth, particularly that of small and start-up businesses. While U.S.businesses have demonstrated a great resiliency in the face of ever-increasinggovernment rules and mandates, there is a limit to that flexibility. And thecost of providing required medical care will force business leaders to makeconsumption choices which will impact job growth at a time when we desperatelyneed to put more people to work.
There will be another costly and confusing impact in ourparticular industry because Congress has directed the Internal Revenue Serviceto administer several key components of the new health care plans, includingPremium Assistance Credits, Small Business Tax Credits, the Individual Mandateand Employer Assessments. The IRS Taxpayer Advocate has warned that health carereform will likely be "the most extensive social benefit program the IRShas been asked to implement in recent history." Without significantadditional resources or shifting of resources away from traditional complianceenforcement, there is a danger that these new and incredibly extensiveresponsibilities will dramatically impact the ability of the IRS to fulfill itsresponsibilities. And the added burden on the tax and accounting industry,which will have to react quickly and effectively to a large number of new IRSregulations and requirements, will be substantial.
-- Jeff Gramlich, President, CCH Small Firm Services
I have spoken on the act, including being on the upcomingpanel for the IRS Live and have attended many discussions on the act. I believethat as massive as this bill is and the number of years for implementation, Idon't know that anyone really understands or knows the true effect. I thinkmore important is that there will need to be legislative and administrativemodifications as the program rolls out.
-- Larry Gray, Government liaison, NATP
The legislation has certainly added complexity toadministrators. I've consistently heard that as a concern. And while many seemto agree that something needed to be done, only time will tell if this approachwas the right one. I see businesses, especially those that were alreadystruggling with rising health care costs, considering more options than everbefore, from the type of plans they offer employees, to cost-sharingarrangements.
-- Calvin Harris, National president and CEO, NABA
It would be hard to find an issue that has generated asmuch debate and discussion as this year's health care bill. Depending on yourperspective, the health care reform bill is either the best or worst piece oflegislation we have seen in our lifetime. There are vast differences in opinionand that will likely create huge differences in how people will answer yourquestion. To some, without this bill, health care costs will continue to riseand coverage will be impossible to obtain and afford, making our economy andbusinesses suffer. To others, because of this bill, we are guaranteed to seehealth care costs continue to rise. They feel that while coverage will expand,the damage to the economy and business from the bill will be severe. It isprobably too early to see which side is correct, or if neither side is correct.What we do know at this time is that the small business market is veryconcerned that they will be forced to offer coverage, that costs will continueto rise, and that their reporting burdens will significantly increase. While itmay take years to see if the first two concerns are real, we already know thatthere will be an increase in the reporting burden.
-- Roger Harris, President and COO, Padgett BusinessServices
Name one major U.S. government program that has actuallysaved money and worked well. That is the major concern I have. In our town hallmeetings with Maryland CPAs, 64 percent thought health care reform will hurtand increase costs with less benefits, while only 12 percent thought it willhelp.
-- Tom Hood, CEO and executive director, MACPA
There are short-term and long-term effects. There is areal need for better medical care for people in lower income brackets. Byaddressing this need, the health care reform will tend to improve socialstability in the short as well as the long run.
The costs of employee benefits will rise, rendering theU.S. workforce less competitive than before. This will exacerbate the balanceof payments to a degree. The deficit will increase as well, because taxes willnot fully fund the benefits.
The negative balance of payments and the burgeoningfederal deficit will cause the U.S. government to issue more and more debt. Inthe long run, this will probably lead to serious inflation. In the short run,however, inflation will continue to be low as the U.S. continues to export itsindustrial base and purchase less expensive goods from China and India.
At present, the U.S. dollar is the least worst choice forthose seeking a stable currency. The turning point for inflation will occurwhen the U.S. debt burden and unfavorable balance of payments have become sotroublesome that the dollar will weaken against the currencies of major tradingpartners, causing the cost of imports to rise and inflation to increase.
The health care legislation alone will not cause this. Itmerely will reinforce trends already in place.
-- Andrew L. Hult, President, NCCPAP
I expect there to be a converse relationship between thecost and the quality of our health care. Cost will increase; quality willdecrease.
-- Trey James, CEO and co-founder, Xcentric
It is much too early to understand or predict the impactof health care reform on the U.S. economy over the long haul. The legislation'simplementation stretches out over an eight-year period, and undoubtedly someprovisions may be modified or eliminated before their effective date. With thatsaid, I believe health care reform will ultimately add to costs of doingbusiness and will create more stress on the U.S. economy.
-- Gregory Johnson, Executive director and COO, NABA
Many people in the U.S. need health care coverage. Theproposed programs will drive administrative costs up and profitability for manymedical organizations down. It will take years for the details to be worked outand improved. Medicare and Social Security have some of the same bad and goodattributes of the new health care program, and the U.S. certainly benefits fromthese programs. The larger problem is not just health care spending, butspending in general, in conjunction with feelings of entitlement.
-- Randy Johnston, Executive vice president and partner,K2 Enterprises
There are significant tax regulatory needs that emanatefrom the legislation. Businesses and tax practitioners will require an immenseamount of guidance to properly comply with the rules. Indeed, as we learn moreabout the details of the legislation, additional legislative adjustments may benecessary. For example, there are significant compliance burdens placed onbusinesses by the new Form 1099-MISC information return rules that becomeeffective over the next few years. Those burdens may far outweigh any potentialbenefits of enhanced information reporting.
-- Edward S. Karl, Vice president of taxation, AICPA
My observation is that everyone seems to be in a"wait and see" mode. With the changes still in the future, littleseems to be happening. Some practitioners (and others) might move to using morepart-time people.
-- Rita A. Keller, President, Keller Advisors
It appears that the recently enacted health carelegislation will initially have a negative impact on the bottom line of mostU.S. businesses. The intent of the legislation is to reduce overall health carecosts over a phase-in period of several years, while providing health coverageto all Americans. The yet-to-be-issued regulations to clarify and implement thehealth care legislation will be critical to understanding whether the intent ofthe legislation will be realized.
-- Kenneth Koskay, Senior vice president and generalmanager of certification, Tax & Accounting business of Thomson Reuters
It still may be too early to predict the impact of thehealth care legislation on business and the U.S. economy. The government stillneeds to work out the intricate details of the legislation and provide guidanceto the insurance companies and businesses.
More directly for the CPA community, firms and CPAs inbusiness and industry have an incredible opportunity to add significant valueto their clients and the businesses they work for. The health care legislationwill take a new level of business and strategic planning for all sizecompanies. The CPA will be at the center of the strategic table to helpbusinesses analyze the impact of the health care reform, perform"what-if" analysis on making changes to company health care benefits,and perform financial planning activities for the business to understand theimpact on their business.
-- Mark J. Koziel, Director, specialized communities,firm practice management, AICPA
While the idea of providing health care for everyone issocially responsible, the argument is in determining the real cost of the newlaw, how it will be paid for, and how it will be administered by the federalgovernment. Many of our clients are concerned about the Large Employer SharedResponsibility Penalty, which imposes nondeductible penalties on employers whofail to offer qualifying coverage, or whose employees decline coverage andpurchase health care via the exchange instead. In addition, clients are waitingfor federal regulations to be completed so they can better understand how theprogram will work and make the right choices for their organization.
While the economic impact and administrative details ofhealth care reform remain to be seen, we're counseling our clients to gain abetter understanding of the law, be aware of the impact it will have on theirorganization, and make certain they're addressing the short-term requirements.We have provided clients with tools and a timeline to help them manage thisprocess and know what to expect over the next several years as provisions of thenew law become effective.
-- Gordon Krater, Managing partner, Plante & Moran
Universal health insurance will have opposing impacts onthe economy. On the one hand, citizens will no longer have to worry abouthealth insurance. As a result, individuals may be treated sooner for thingsthat they could not afford before. This could reduce the medical costs later onfrom the same problem. On the other hand, we have to pay for this in the shortterm and that will happen with higher taxes. In general, the tax increases willmost likely reduce available capital for the private sector to invest. So, inthe short term, I think it will help the economy by providing stability andbetter medical care for all. The other short-term benefit is that thegovernment will be investing in health care technology, which will create jobs.In the long term, it is unclear if the tax impact will be significant enough tooutweigh the economic benefit from a healthier populace.
-- Rene Lacerte, Founder and CEO, Bill.com
Rates appear to be going up, already creating a furtherdrag on business profitability. For most businesses, there will be an immediatenegative impact on the administrative burden of reporting requirements. It isstill too early to determine the total impact for many businesses, given thatthe legislation itself could be ruled unconstitutional and many of the elementsof the plan will come into effect at various time periods in future. Ofgreatest long-term concern, however, is the fact that the bill has failed toaddress the most important financial issue: cost containment. Without seriouscost containment, it is clear that our health costs will continue to risedramatically and in ways that will have serious negative impacts on business,individuals and the U.S. economy.
-- Mont Levy, CEO and principal, BAM Advisor Services
Regulation will be a major drag on the economy until allthe issues are worked through. Potential medical cost containment willhopefully be a growth accelerator.
-- Taylor Macdonald, Vice president, Intacct
The effect is uncertainty. How many employers will chooseto pay a penalty, rather than offer insurance as a benefit? We just don't know.The more firms that choose to pay a penalty, the more people will be looking tothe government and the insurance exchanges.
-- Eric Majchrzak, Marketing and communications director,Freed Maxick & Battaglia
The health care reform legislation will have asubstantial effect on most -- if not all -- employers and employees. WhenPresident Obama was campaigning, he said, "The project of the nextpresident is figuring out how you create bottom-up economic growth, as opposedto the trickle-down economic growth." This legislation executes on thatproject.
-- Krista M. McMasters, CEO, Clifton Gunderson
I don't think anyone can predict what the precise effectwill be. I do know, however, that all legislation that has an effect onbusiness operations, especially something as sweeping as health care, willnecessitate a role for the CPA. As the trusted advisor, CPAs help their businessclients and employers to navigate the changes mandated in the new laws so theycan remain productive and competitive.
-- Barry Melancon, President and CEO, AICPA
These provisions are still being sorted out by SmallBusiness America. There are many new costs to be borne by small businesses.Some benefits. Thus there is a "deer in the headlights" effect on the29 million small businesses in the U.S.
-- James C. Metzler, Vice president of small firminterests, AICPA
The job market may get a boost due to new tax credits tosmall businesses that provide health insurance, reducing their labor costs.
Tax hikes to pay for coverage of the uninsured willnegatively impact businesses and high-income individuals.
Insurance companies will see increased competition andsqueezed margins due to tighter regulation and increased consumer transparencyon the new exchanges.
New taxes on medical device and drug makers could impairthe ability of those companies to raise capital.
Large companies may cease to offer health benefits asthey weigh the difference between the cost to offer coverage and the governmentfine for not doing so. However, as the job market improves leading up to 2014,those companies will need to consider the impact of dropping coverage on theirability to attract and retain employees.
-- D. Scott Moore, President, Association for AccountingMarketing
As with any major legislation that is passed by Congress,businesses will either learn and adjust to the new laws put in place or theywill suffer because they are unwilling or unable to stay flexible andcompetitive. A good friend (who works for a regional CPA firm) who opposed thelegislation asked me, "Why would my employer continue to offer me healthinsurance when they know that the government can offer it to me for free?"My answer is, if that CPA firm, or any other small business for that matter,wants to retain their best employees, they will continue to offer them a betterbenefits package than can be offered by the federal government. Regardless ofthe state of the economy, people have to choose whether or not they are happywith what their employer is offering them in the way of benefits. If theybelieve they are being taken advantage of and are not happy with the benefitoptions afforded to them, they have the power to leave that job. Similarly, ifa business owner or a management team sees good employees leaving their companybecause of their displeasure with their options, that management team orbusiness owner may want to reconsider their approach so far. In other words,business will have to continue to offer competitive benefits to keep the bestemployees.
With regard to the economy as a whole, hopefully it willencourage innovation amongst hospitals, doctors and insurance companies. Insurancecompanies will be given the opportunity to provide new products, while doctorsand hospitals will be able to treat more people that need preventative care,and individuals will hopefully become more educated about their health and howto make good lifestyle choices. All of which will have a positive effect on oureconomy through the creation of jobs, a more health-conscious society andfairer treatment for those people that may not be able to afford the coveragethey need.
-- Caleb Newquist, Founding editor, Going Concern
Health care is probably the single most criticallegislation facing businesses today. Health care is out of control.Unfortunately, I do not believe current reform legislation proposals will bebeneficial to the economy or businesses. Costs will prohibit economic growthand reform needs a different solution.
-- Jay N. Nisberg, President, Jay Nisberg &Associates
Small businesses in the United States will be materiallyimpacted by the health care legislation. We serve 1.8 million investors, withone third of those investors owning small business. In addition to thesmall-business owners we serve, we partner with over 5,000 tax professionalswho are small-business owners themselves. Small businesses are the backbone ofthe U.S. economy, and the impact of these changes will be hard to gaugeimmediately since the legislation implements regulations over the span ofseveral years. Based on the 2,400 pages in the bill, the health carelegislation will affect their hiring strategies, their competitive advantageand their profits.
The legislation imposes mandates on employers with morethan 50 workers to provide health insurance to their workers with penalties fornon-compliance. This mandate forces small-business owners to make difficultchoices. Does the small-business owner decide not to grow his human capitalmerely to stay below the arbitrary number of 50 employees to avoid the mandate?Decisions made entirely on providing employee health coverage should not be thedetermining factor in whether or not to add new team members. As such, theiropportunity to grow revenue and profits will be limited. If small businessdoesn't expand, the economy could be impacted with lower expansion and growth,which will trickle down to lower hiring rates and GDP growth.
To fund the health care benefits, taxes paid bysmall-business owners will also increase. For example, couples earning morethan $250,000 will see a 3.8 percent tax increase on earnings from capitalgains and dividends. The tax rates on long-term capital gains were already setto go up at the end of the year to 20 percent, from 15 percent, but now withthe passage of the health care bill, investors will see the tax rate jump to23.8 percent. As marginal rates increase, small-business owners will see lessincentive to earn each incremental dollar. Fewer incentives for entrepreneursto grow their business will have a negative impact on hiring and productivitygains in the United States.
Small-business owners are continuing to digest thelegislation's impact to their businesses. They will be consulting with theirtax and financial advisors to determine the right direction for their businessand personal wealth.
-- Roger Carlton Ochs, President, H.D. Vest Inc.
This will have enormous ramifications and plenty ofunintended consequences. There are probably very few people who have even readthe entire bill. As a small-business employer with less than 25 employees, I amvery concerned about the impact on my employees' current health insurance plan,what the company will be required to do and what will it cost.
-- Judith O'Dell, Chair, FASB Private Companies FinancialReporting Committee
While access will certainly go up, I can't help butbelieve the overall quality of care will go down. Paying for the new mandate isthe equivalent of trying to drive a boat while the anchor is lowered, and willplace an undue strain on the economy. I fully expect to see entrepreneurial,non-traditional practice models emerge in light of the new realities.Ultimately, this may be good for everyone as it will re-introduce competitionand choice into the market. Vouchers for "private" health care,anyone?
-- Jeffrey S. Pawlow, CEO and managing shareholder, TheGrowth Partnership
There appears to be a great deal of uncertainty regardingthe impact of the legislation on business and the U.S. economy. Already we areseeing significant reaction to Section 9006 of the act that requires businessesto report purchases of goods or services in excess of $600 annually to the IRS.This would be a significant expansion of the current information reportingrequirements. In fact, just a few days ago the AICPA wrote a letter to membersof Congress asking them to repeal that section of the act.
As a solutions provider in this area, we are engaged withour customers and regulatory bodies to find the best solutions to meet thesenew requirements.
-- Brian Peccarelli, President, Workflow & ServiceSolutions, Tax & Accounting, The Tax & Accounting business of ThomsonReuters
Right now I believe there is much uncertainty about whatthe health care reform legislation means for business and the U.S. economy. Isuspect adjustments will be needed to the legislation as we begin to understandwhat the requirements are and the costs associated with them.
-- Teresa S. Polley, President, Financial AccountingFoundation
The legislation imposes new obligations on employers at atime when the impact can be significant. The legislation was rushed without theopportunity for the potential impact to be fully considered. The process underwhich the health care bill was approved by Congress represents the worstexample of how the process works --- or doesn't work.
-- J. Clarke Price, President and CEO, Ohio Society ofCPAs
First of all, the health care reform will provide healthcare to over 30 million people who did not have insurance before. It is hard toanticipate the economic impact of people having the proper health care so theycan remain more productive in society and lead longer lives. If it helps cutcosts and reduce premiums as reported, we could see growth in wages for workingpeople which account for increased spending and economic improvement.
In addition it should generate additional jobs, bycreating new, improved technologies, and by allowing more entrepreneurismbecause of the concern to leave a job because of the health plan benefits.
Perhaps most important in Washington is the federalbudget. According to the Congressional Budget Office, the bill will reduce thedeficit by close to $150 Billion over 10 years.
-- Robert Reid, CEO, Intacct
I believe there will be many significant changes incurrent business models for organizations in the health care "supplychain," and these changes will provide vast opportunities for accountantsand business professionals to contribute in a variety of ways. With respect tothe U.S. economy, as long as there is widespread uncertainty regarding manyaspects of the health care reform, the economy is prone to be affected in anegative way due to insecurity among many key decision makers and businessleaders. Once a clearer understanding of the scope of the changes are betterunderstood, I do believe new opportunities will be created that will havepositive outcomes for certain businesses.
-- Sandra B. Richtermeyer, Global Chair, Institute ofManagement Accountants
Long-term, health care reform should have a positiveeffect on the U.S. economy. Prior to health care reform, health care wascosting our economy a higher percentage of output than was the case for most ofour trading partners. Projections were that health care reform would contributeto reducing the deficit. While there will certainly be a cost to business ofproviding health care coverage in accordance with the mandate of health carereform, it is expected that those additional costs will eventually be offset bythe reduced administrative costs that are part of the current health system andreduced need to help pay the burden of providing health care for the uninsured.The legislation may have to be tweaked over time to better achieve these goals,but in the end I think it can be a win-win for business and the U.S. economy.
-- Kevin Robert, CEO, Wolters Kluwer Tax & Accounting
Due to the phase-in provisions of the Affordable CareAct, it will take years for business and the U.S. economy to recognize the fullpositive impact of this legislation. The impact on the U.S. will be positive,both economically and in the quality of future medical care to be provided. Thefirst to benefit from health care reform legislation include those withpre-existing conditions, families with children between college and full-timeemployment, and small-business sole proprietorships with no employees (whichrepresents 72 percent of all businesses in the U.S)
Large businesses will be the last to benefit and may findit cheaper initially to pay "penalties" for non-compliance, ratherthan offer medical insurance benefits to all employees, including part-timers.Initially the cost of compliance and paperwork mandated by this act will be areal burden on all businesses. The accounting profession will be the primarybeneficiary, with increased billing from new mandated disclosure requirementson all W2s and reporting of business-to-business transactions in excess of $600on Form 1099.
However, in the long run, new medical-related careeropportunities and new medical technologies will stimulate the economy. In thelegislation, $1 billion has been allocated for the Qualifying TherapeuticDiscovery Project Credit, whereby federal tax credits up to $5 million percompany are provided to encourage new medical innovation. Insurance exchangeswill be created, as well as a national database of electronic record medicalrecords. This legislation will ultimately stimulate business innovation andresult in better affordable health care for everyone.
-- Michael Rosedale, President and founder,CPADirectory.com
1. The legislation was designed to have an economicimpact. It was designed to make an insane, arcane, and discriminatory healthcare system more rational, including providing health care to millions withoutit. If we didn't have such a polarized, partisan national legislature, we couldcome up with a health care plan that would have a positive impact.
2. I don't like predicting the future. If anyone knewwhat the impact of this legislation would be, economically, then there wouldn'tbe such acrimony over it. So, I don't have any idea about this and anyone whosays they do is lying or misinformed.
-- Marc Rosenberg, President, The Rosenberg Associates
I think in the long run it will help. After the adoptiontransition period, we will see improved health care -- lower cost, bettercoverage, and fewer increases, etc.
-- Frank K. Ross, Director, Center for AccountingEducation, Howard University
It may be too early to tell, since some of thelegislation may get overturned or re-framed after the midterm elections.
-- Rebecca Ryan, Founder, Next Generation Consulting
Of course, we all hope this will be a win-win forbusiness and the economy, but this is a huge initiative with lots of angles andissues -- and it's still not certain what it's going to look like by the timewe get to full implementation of the law. I think how businesses are affectedwill vary. Firms under 50 employees will be have more options for joiningtogether to purchase insurance as a pool, which should decrease per-employeecosts. There are also provisions in place to increase tax credits, which shouldlower cost per covered employee. However, provisions relating to coverage ofthose who are uninsured or underinsured will increase employee coverage. Itcould be that the net will be an increase in cost for some businesses, and adecrease for others, but there are so many factors involved it's hard to say atthis time what the ultimate impact will be.
-- Mike Sabbatis, President and CEO, CCH, a WoltersKluwer business, North America
Health care reform is going to have a significant impacton American business, particularly the middle-market privately held companies.Though we cannot yet grasp the full ramifications of the massive legislation,the cost of doing business is going to go up at a time when business owners arestruggling to keep their heads above water.
-- Frank Schettino, Managing partner, Anchin, Block &Anchin
The legislation will eventually provide more insurancecoverage for more Americans at a lower cost. However, initially the overallcosts of health care will go up because of the complex nature of the new lawand system. Eventually, the combination of market forces and more competitionwill drive these costs down and create a more competitive market.
-- Mark Schlageter, President, Business Compliance &Knowledge Solutions, the Tax & Accounting business of Thomson Reuters
Since the legislation doesn't fully kick in until 2014,that delay coupled with the sheer size of the legislation, the number of peopleit affects and the authority it leaves to regulators will make it extremelydifficult to get any true read of its impact on business and the economy for awhile. This long period of time between enactment and implementation is causinga high level of uncertainty within the business community, and uncertainty isusually never good for business decision-makers or the economy.
So my guess is it will probably have a negative effect onbusiness, at least initially. Many small businesses that employ less than 50people (one of the thresholds in the legislation for tax penalties andcompliance requirements) appear to be sitting tight on hiring any new employeesuntil they can get a better handle on what their costs are going to be underthe new legislation. They don't want to cross that threshold. That will not behelpful to our current employment situation in the country. Also, thelegislation will impose a new Medicare payroll tax on investment income and anincrease for higher-income individuals starting in 2013 that may have adampening effect on investments and the economy.
The biggest issue I am hearing now relates to taxreporting requirements under the new law. All businesses will have to reportthe value of health care benefits on employees' W2 forms starting in 2012.Businesses will also have to create and submit a 1099 form for every payment toindividuals and other businesses of $600 or more. These requirements will be anadditional expense and regulatory burden for business, and the costs will haveto be absorbed or passed on to consumers.
The supporters of the legislation hope over time it willhelp lower health care costs. That is certainly not likely to happen in thenear term. Only time will prove if that is true at all. Based on our historicalexperience with other government programs like Medicare, I would not startspending the anticipated savings, as they may not materialize.
-- John M. Sharbaugh, CEO and executive director, TexasSociety of CPAs
I still do not fully understand all the provisions of thebill, only having read summaries in periodicals, etc. If I understand itcorrectly, by about 2016, some 30 million people who currently do not havehealth insurance (and therefore health care) will become eligible for healthbenefits under the legislation. And the cost of this could approach $1trillion. That has to come from somewhere, probably from an increase in taxesand or fees, or an increase in the deficit. Most likely it will come from both.
Most businesses, other than the smallest ones, will beaffected, even those currently providing health insurance. For those notcurrently providing health insurance, their employees (subject to certainincome-level restrictions) will have the opportunity to purchase subsidizedinsurance through a government-sponsored exchange. In such cases, thosebusinesses will be required to pay fees to cover such subsidies. And even if anemployer provides health insurance but an employee who does not currently optfor health insurance chooses to purchase insurance personally through theexchange, that employer also has to pay fees to cover the subsidy. This willsurely affect a multitude of businesses negatively.
Additional income taxes are also part of the legislationto cover the cost of the bill. In my opinion, increasing taxes to subsidizeadditional government spending always has a negative impact on the economy ingeneral.
I believe the only businesses that will not be negativelyimpacted by this legislation (other than those having under 50 employees) arecertain types of health care providers like hospitals.
-- James Sikich, CEO and managing partner, Sikich LLP
The health care bill is probably one of the biggestlegislative disasters in the history of our country. It will provide benefitsto no one and cost everyone dearly for a very long time. I can only hope itwill be overturned but a future Congress.
-- Douglas Sleeter, Founder and president, The SleeterGroup
Small businesses play an important role in the U.S.economy and are a strong driver of job growth and innovation. But smallbusinesses are severely disadvantaged by the current U.S. health care systemrelative to their larger counterparts. This year's health care reform couldhelp spur entrepreneurial activity by increasing the incentives for talentedAmericans to launch their own companies. Consequently, there could be anadditional number of workers willing to work at small firms.
-- Brad Smith, President and CEO, Intuit
In the short run, it will hurt us all. Until we figureout how we are going to pay for it all, it's going to hurt small businesses.
-- Jeffrey D. Solomon, Chairman, Massachusetts Society ofCPAs
While health care reform expands coverage for millions ofAmericans, it does not address the rising cost of health care as a percentageof the U.S. GDP. Businesses and the economy will be affected in many ways,including the following:
1. The rising cost of health care will continue to placean increasing burden on employers required to provide health care coverage fortheir employees. Increased health care expenses will squeeze profit margins.Many companies will pass on these increased costs to employees and consumers.
2. The cost of expanding health care coverage will besubsidized by state and federal governments, which will create a need foradditional tax revenues. The tax burden for individuals and businesses willincrease in the future to fund these new government expenditures.
3. Consumer spending accounts for approximately 70percent of the U.S. economy. If consumers have less money to spend because ofincreased health care costs and higher taxes, the U.S. economy may ultimatelysuffer.
The individual components of this legislation are phasedin over the next few years. It likely will be several years before we know thetrue impact this legislation will have on business and the U.S. economy.
-- Neal D. Spencer, CEO, BKD
As with any legislation, there are both positive resultsto be achieved and challenges. Business will have to adapt. The economy willneed to adjust, but throughout that period, CPAs will be called upon todemonstrate their expertise as the trusted financial advisor in dealing withcomplex issues. The role of the CPA will be to help navigate business throughthis reform and provide value-added services to educate and assist businesses,generating positive results.
-- Paul V. Stahlin, Chairman, AICPA
From my perspective working with the Sage HealthcareDivision and the small to midsized practices we serve, the reform and the ARRAfunding should be an extremely positive driver in this space for several yearsto come as medical practices move from paper-based records and offices toelectronic health records and paperless offices.
The federal government will help to mitigate costs topractices that move to EHRs and will offer incentives -- $44,000 (up to $64,000if certain requirements are met) for each qualifying doctor within a practice-- to hasten the transformation. What seems like a once-in-a-lifetime benefitfrom the government should prove beneficial to anyone using the health caresystem.
For example, for a medical practice, EHRs provide directcost savings to a clinic; typically the result of less office space consumed bypaper records, and reduced budgets for services and supplies such as paper. Inaddition, practices are much better able to track patient outcomes and analyzedata and trends, and respond accordingly; and doctors are much more likely toget back to practicing medicine because EHRs help streamline the business ofmedicine.
From a patient's point of view, EHRs grant them morecontrol of their health and allow them the ability to better track their records,communicate with their provider, view lab work online and request prescriptionrefills.
Essentially, I think we'll see a dramatic increase in thenumber of practices using EHRs because doctors and their patients will begin tounderstand EHRs' place of importance in health care. Simply put, in thisspecific area, health care reform should drive the U.S. toward a better healthcare system, for the provider running a business and for the patient receivingimproved care, and potentially a stronger economy overall because of spendingfueled by the stimulus act of 2009.
-- Sue Swenson, President and CEO, Sage North America
There no doubt will be an effect, but it would be purespeculation now. However, CPAs the work for U.S. and international businesseswill be a critical element in making sure that the legislation is implementedin an effective manner. There are so many provisions that businesses need tounderstand.
-- Arleen Thomas, Senior vice president of membercompetency and development, AICPA
I believe the year's health care reform legislation willsignificant impact on both business and the U.S. economy. From a businessperspective, companies will clearly incur additional costs. However, if acompany properly administers health care benefits, the additional cost arisingfrom the legislation maybe offset partially by increased productivity andemployee loyalty. In my opinion, a healthier workforce could result inincreased productivity and employee morale, which should lead to an enhancedbottom line for businesses. If the aforementioned happens, then the U.S.economy should be improve and the public cost to be provide health care shouldbe reduced. Implementation and execution of health care reform legislation bylawmakers/administrators and businesses are critical to achieving a positiveimpact on business and the US economy.
-- Ralph Thomas, Executive director, NJSCPA
While it is still too early to tell the full effect ofthis year's health care legislation, since implementation details are still beingworked out, it is clear that millions of Americans will now have access toaffordable health care, who previously could not have afforded it. Thelegislation has the potential to benefit the economy by decreasing the risingburden of health care costs, improving the quality and efficiency of healthcare, and reducing government spending on Medicare and Medicaid. Thelegislation will have a positive effect on business if it helps cut costs andreduces premiums.
-- Jeffrey C. Thomson, President and CEO, IMA
As the most sweeping domestic policy change the U.S. hasseen in decades unfolds, there are vast implications for businesses across allindustries. Smart companies know they must move swiftly to adapt to offset theimpact of rising health care costs on profitability and to comply with newadministrative and reporting obligations.
But this is more than an exercise in finance orcompliance -- it is about innovation. Companies must find innovative ways tocontinue providing the coverage their employees expect, while ensuring theseemployees fully understand the options that are available (or those that may nolonger be available) to them. All this, while navigating uncharted and changingregulatory waters.
-- James S. Turley, Global chairman and CEO, Ernst &Young
When implemented, the new health care reform laws willrepresent the most significant changes to the delivery and financing of healthcare since the inception of Medicare in 1965. The new laws represent acomprehensive journey towards the goals of increasing access to healthinsurance for all Americans, enhancing quality of care, and reducing cost.
These are extremely complex laws that will evolve overthe next decade as rules, regulations, technical corrections, and operationaldetails are defined and public policies are refined. Leading proponents of thenew laws expect additional changes over time.
Reform is accelerating the transformation of the healthcare system to potentially change the way that care is delivered, paid, andinsured in the U.S. We are already seeing health care systems, hospitals,physician groups, health insurance companies, and pharmaceutical manufacturerslooking for new ways to reduce cost and to work together to enhanceefficiencies.
The new laws will affect not only the health care"ecosystem" but also virtually all companies, state governments, andAmericans.
For businesses of all sizes, analyzing andoperationalizing the key provisions of the legislation and its regulations arecritical. Companies need to stay current on the accounting, reporting, and taximplications and compliance requirements.
In addition, leading companies are re-assessing theiremployee health benefit strategies, including the potential impact on humancapital management, and evaluating options to provide for the health care oftheir workforce and to offer competitive salary and benefits packages now andinto the future. They are pressing health insurers and health care providers tolook for innovative ways to reduce the cost of health care, includingprevention and wellness. They are planning now to ensure compliance with theregulations that will be issued and recognizing that new options for theirconsideration are likely to emerge over time.
-- John B. Veihmeyer, Chairman and CEO, KPMG
In this period of financial uncertainty for U.S.families, it is evident that some form of health care change was necessary.What should really be pointed out is the impact of bankruptcies on the U.S.economy, as nearly half of bankruptcies in the U.S. resulted from medical costs(and only 25 percent of those that filed for bankruptcy were uninsured). Thissupports the fact that the existing health care system is clearly challenged.
An interesting perspective that Dr. Alan Gin, anassociate professor of economics at the University of San Diego gives is thatthe existing health care system almost stagnates innovation, as people areunwilling to leave jobs for fear that they would lose their health carecoverage and not qualify for a new plan. This stifles small business start-upsand innovation, as many are hesitant to leave their existing roles to pursuetheir passion, a passion that often has a positive impact on the economy andcould lead to new business formation and economic growth in the small-businesssector. Hopefully, health care reform will help address this issue.
With every new piece of legislation, there are positiveand negative effects, and this is no different. I feel as though it is tooearly to comment on the full impact of this new piece of legislation on theeconomy, but at the end of the day it is obvious to me that some kind of changewas needed.
-- Jennifer Warawa, Senior director of partner programs,Sage North America
Small businesses play an important role in the U.S.economy and are a strong driver of job growth and innovation. But smallbusinesses are severely disadvantaged by the current U.S. health care systemrelative to their larger counterparts. The proposed reforms could help spurentrepreneurial activity by increasing the incentives for talented Americans tolaunch their own companies, and could increase the pool of workers willing towork at small firms.
-- Jill Ward, Senior vice president, Intuit
Small business is the key driver of the U.S. economy. Theincreased regulation and tax on these businesses will discourage investing andhiring by these companies. The reporting requirements, regulations, tax anduncertainties will have a depressing effect on the U.S. economy.
-- Troy Waugh, CEO, FiveStar3
It is still too early to determine the impact, but eventhe most well-intentioned actions can have unanticipated side effects. Healthcare reform would certainly fall into this category. It will be some timebefore the true impact can be measured.
-- Jack Weisbaum, CEO, BDO USA
Initially -- none! Much of the health care reform billwill not take place until 2014. I believe that between now and then, there willbe several changes that will ultimately determine how business and the economywill be affected. In the meantime, firms large and small need to educatethemselves and prepare for what is coming. I have found that the SHRM Web sitehas great resources for firm leaders.
In most firms that I work with, they are already incompliance and have been treating their staff in a fair manner that meets, andin most cases exceeds, the new laws that will be in place. However, firms doneed to prepare for an increase in rates every year, as rates will not decreasewith the reform that is taking place.
-- Sandra L. Wiley, Partner, Senior consultant and COO,Boomer Consulting
It seems that the big winners may be hospitals, who willhave fewer uninsured patients and perhaps fewer bad debts; state governments instates where there are a large number of uninsured; and small businesses with lessthan 10 employees averaging less than $25,000 per year who offer healthinsurance to their employees (and pay at least half of the premiums) as they'llget the highest credit (up to 50 percent of premiums paid in 2014). Also,children and adults with pre-existing conditions will benefit, although adultswill not until 2014. Obviously, the legislation is not perfect, and there areconcerns about the economic impact of requiring health insurance benefits forbusinesses with greater than 50 employees, the increase to our nation's deficitand the increased taxes to offset costs, to name a few.
-- Jennifer Lee Wilson, Co-founder and owner,ConvergenceCoaching
I believe that this year's health care reform legislationwill have a negative effect on business and the U.S. economy. I believe thatsmall business will not be able to absorb the cost and also be able to maintainthe employment numbers it now supports. I believe this legislation, along withother legislation, is contributing to a great deal of uncertainty among smallbusiness and that capital which is available for expansion is being held untilthat uncertainty is removed -- and how and when that will happen is anyone'sguess.
-- Donny J. Woods, President, National Society ofAccountants
The legislation is so recent and far-reaching that it ishard to predict its effects on the economy at this time, particularly since itsimpact will be felt for many years into the future. I believe, however, thatthe effect will be positive. The Congressional Budget Office has said that thelegislation will reduce the deficit by $143 billion over 10 years. The WhiteHouse Council of Economic Advisers believes that the bill can create some320,000 new jobs. Mobility in the workplace will increase as people seek newjobs who have been afraid to leave their current job and lose their healthcoverage -- especially if they or a member of their family has a pre-existingmedical condition. These benefits must be balanced by the realization ofreductions in Medicare and Medicaid costs the legislation specifies, andCongress' willingness to enact these reductions in the future. But the mostimportant provision -- that 31 million uninsured can now obtain health care --leaves me optimistic that the legislation will have an overall positive impacton people's lives as well as the economy.
-- Yacov Wrocherinsky, CEO, Infinity Info Systems
The health care legislation increased taxes, which can'tbe good for the economy. And because the threshold for "Cadillac"plans is indexed by inflation (which is far outpaced by the rise in health carecosts), many companies will find their health insurance costs skyrocketing overthe next several years. Since the penalty for not insuring employees is muchless than the cost of insuring them, more companies will decide to stopproviding health benefits. The primary issue with health care is its high cost.and unfortunately the health bill did little to address that.
-- David Wyle, President and CEO, SurePrep
Here is one way to look at the business environment goingforward. Taxes are going to go up. Interest rates are going to go up. Costs aregoing to go up. Inflation is probably going to go up.
What does that say about the business environment? It isless than optimal. And some are making the case that the health care reformlegislation is contributing to the resulting uncertainty.
-- Michael R. Young, Partner, Willkie Farr & Gallagher