News From...Congressman Vito Fossella

PRESS ANNOUNCEMENT

Staten Island, NY -- In response to a disturbing front page story in yesterday's Staten Island Advance, Congressman Vito Fossella (R-NY, 13th District) today pledged to renew his commitment to passing legislation that would expand health care coverage for small business owners in the borough.

Noting that Staten Island has the greatest proportion of employees working in companies with fewer than 10 employees of any of the five boroughs and that almost 60% of all people employed on Staten Island work for firms with fewer than 100 employees, Fossella said that he will again cosponsor legislation to immediately allow small business owners to deduct 100% of their health insurance costs.

"Yesterday's story only quantifies what I have been saying for some time -- that too many Staten Islanders are forced to go with coverage because of its high cost," Fossella said. "I believe that we can begin to turn back the tide by permitting small business owners to deduct 100% of their health insurance costs. On Staten Island, many residents are self-employed, and they work day and night just to make ends meet. If these hard-working men and women were allowed to deduct 100% of the cost of insurance, in many cases they would probably have enough money to maintain or purchase health coverage. In turn, they would likely have a few extra dollars to also provide some form of insurance to their employees. Quite simply, I believe that immediately increasing the deductibility of health insurance to 100% for self-employed Staten Islanders would greatly encourage and expand health-care coverage. This is truly a win-win situation for Staten Island and America."

Under the Taxpayer Relief Act of 1997, the deductibility was accelerated to 45% in 1998 and will hit 100% in 2007. Fossella said stories such as yesterday's in the Advance are a "warning signal" that Congress must act to increase the deductibility to 100% in 1999, nearly a decade ahead of schedule.

The Advance reported yesterday that up to 75% of small business would likely not offer health insurance to their workers within five years. A Staten Island Chamber of Commerce survey recently found that 50% of its members do not offer coverage. In New York alone, there are over 660,000 self-employed individuals.

Nationally, the problem is reaching epidemic proportions. In 1996, 5.4 million self-employed heads of households and their dependants, including 1.5 million children, were uninsured, up several hundred thousand from the previous year. Many of those uninsured Americans are self-employed small business owners. Small businesses account for roughly 99.7% of all employers in the nation.

Legislation to accelerate the phase-in period passed the House last year, but was doomed after President Clinton threatened to veto it. Fossella said that stories such as yesterday's are commonplace in virtually every community throughout the nation.

"The problem we are witnessing is not unique to Staten Island," Fossella said. "Small business owners throughout the nation are being forced to cancel coverage for their employees because of its high cost. Last year, I cosponsored legislation to accelerate the phase-in period, and today I renew my commitment to fight to make coverage more accessible and affordable for all Staten Islanders. I also plan to look in greater depth at other options for Staten Islanders, including healthmarts and tax credits that would offer residents choice and convenience at an affordable price."

A recent analysis found that Americans who pay for health coverage with their own after-tax dollars are 24 times more likely to be uninsured. Almost 48% of all uninsured workers are either self-employed or are working in private sector jobs with fewer than 25 employees. And only 26% of self-employed workers and private sector workers in firms with fewer than 10 employees had health insurance compared to nearly 68% of workers in private firms with 1,000 or more employees.

In contrast to small businesses, corporate employers are allowed a 100% deduction to pay premiums with tax deductible dollars while self-employed workers pay the portion of their health insurance premiums that are not deductible with after-tax dollars. In essence, the after-tax cost of small business and self-employed health insurance premiums is greater than the cost paid by larger corporate employers.