California Budget Offers Improved Healthcare for Small Businesses
Statement by Mark Herbert, California Director for Small Business Majority, on provisions in California’s 2019-2020 budget that would benefit small businesses
California’s 2019-2020 budget includes funding for proposals to expand existing healthcare subsidies and implement new additional state subsidies, as well as expanding Medi-Cal, which is great news for small businesses because these proposals have the potential to reduce costs for small firms.
One of the budget’s provisions would extend additional assistance to individuals in the middle class who do not currently qualify for federal premium subsidies. This plan is a great first step toward improving affordability for thousands of moderate-income individuals and families, including many entrepreneurs and small business employees, by creating a state tax credit in the Covered California individual marketplace for those who make between 400% and 600% of the federal poverty level (FPL).
Small business owners strongly support this type of proposal. In fact, a recent scientific opinion poll conducted on behalf of Small Business Majority found 70 percent of California small business owners support expanding cost-sharing subsidies to individuals who make up to 600% of the FPL. This is essential for many entrepreneurs because the median income of an incorporated small business is about $57,000 but the current cutoff for healthcare subsidies is about $50,000.
Additionally, the budget includes funding to expand Medi-Cal to undocumented immigrants. Extending this coverage would drastically decrease the number of remaining uninsured in the state, as more than half of the total uninsured are undocumented. What’s more, many of these undocumented individuals also run or work in small businesses. Since these Californians do not have insurance they are accessing our healthcare system in an inefficient manner, thereby adding to the instability of the system. Extending coverage to this group would lower costs and increase affordability for everyone.
These healthcare provisions are the most significant development in years for many small businesses that still struggle to afford healthcare. Although the Affordable Care Act (ACA) changed the game for California’s small businesses and solo entrepreneurs, we cannot overlook the fact that 2.9 million Californians still do not have insurance, including roughly 324,000 solo entrepreneurs.
The budget also expands the CalEITC program to individuals making up to $30,000 annually, which would offer a significant benefit to many low-income, solo entrepreneurs as they’re getting their businesses off the ground. Last year was the first time self-employed workers were eligible for the CalEITC, and more than 500,000 of them claimed the credit. That amounted to nearly 30% of all of total recipients. Increasing the benefit will also help businesses in California through increased business sales—in 2016 alone, $196.1 million in CalEITC benefits generated more $247.1 million in business sales. While we are pleased with the expansion of the credit, it is also essential that lawmakers adopt Gov. Newsom’s tax conformity proposal to pay for the EITC expansion.
We are glad California lawmakers approved a budget that will greatly benefit small businesses. While we had hoped for more funds for healthcare subsidies, we are optimistic the conversation around healthcare affordability and access will continue next year.
About Small Business Majority
Small Business Majority was founded and is run by small business owners to ensure America’s entrepreneurs are a key part of a thriving and inclusive economy. We actively engage our network of more than 58,000 small business owners in support of public policy solutions and deliver information and resources to entrepreneurs that promote small business growth. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about key issues impacting small businesses and freelancers. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.