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Minority-owned businesses are
5.8 million strong, and growing. Generating over $1 trillion each
year, they continue to build their presence across local
communities and 41 countries worldwide.
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Between 2002
and 2007, the growth of businesses owned by minorities outpaced the
growth of nonminority-owned businesses. These entrepreneurs are
important contributors to local markets, but they are also crucial
to developing national economic competitiveness.
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Of
minority-owned enterprises, 1.6 million are owned by Asian
Americans. Of those businesses with fewer than 100 employees,
nearly 2.3 million are owned by Hispanic Americans and nearly 2
million are owned by African Americans. Nearly 2 million minority
employers are women.
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The diversity
of minority employers is present in virtually every sector of
private industry, yet many of them encounter similar disadvantages.
As racial and ethnic minorities, these employers, employees, and
their families experience significant health disparities, which are
aggravated when they are unable to access affordable health care
coverage. Many small employers are unable to access coverage for
themselves or their employees. Because insurers consider these
employers “small groups,” small businesses are not as likely as
large groups (large employers) to spread risk.
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Small
businesses are often considered high-risk groups, so insurers
charge them high costs. These high costs keep many small employers
from offering health benefits, and when small business employees do
obtain health coverage through their employers, they tend to have
less generous plans than employees at large businesses.
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In 2010, 99
percent of large employers offered health benefits, but only 76
percent of employers with 10 to 24 employees offered coverage.
What’s more, only 59 percent of microbusinesses (with 3 to 10
employees) offered coverage.
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Minority
employees of small businesses also have much to gain from the
Affordable Care Act. Currently, almost one-third of the uninsured
(13 million people) are employees of small businesses. The
situation is worse for racial- and ethnic-minority
Americans.
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The new law
responds to small employers’ desire to develop their competitive
edge and obtain affordable health care coverage for themselves and
for their employees by offering tax credits to participate in the
state-based health insurance exchanges. This benefit is already in
place. Small employers know that offering health coverage helps the
bottom line. Businesses with health care coverage are more
competitive; this added benefit helps recruit top employees, retain
successful ones, and increase the firm’s productivity.
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Currently,
small businesses are eligible for a tax credit of up to 35 percent
(25 percent for nonprofits). This credit helps lower the cost of
insurance for struggling small businesses, as it is directed at
businesses with fewer than 25 employees and average annual wages
below $50,000.
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The tax
credit for these businesses is even more generous in 2014. It will
go up to 50 percent (up to 35 percent for nonprofits). These
credits will significantly
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offset the
cost of health insurance for these groups.
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Racial and
ethnic minority employers can also look forward to the exchanges,
which will also be implemented in 2014. Businesses with fewer than
100 employees can shop from a menu of insurance options in the
exchange. Each option will meet a set of cost and benefit criteria.
Providing affordable coverage options is a key goal, so these new
marketplaces will pool the risk of participating individuals and
businesses, which in turn will lower the overall cost of
insurance.
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Thanks to the
employer tax credit and the low-cost exchange plans, self-employed
individuals are expected to obtain coverage at near-universal
rates.
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Many racial
and ethnic minority business owners are self-employed. Currently,
self-employed workers comprise 78 percent of small
employers.
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Health care
reform promotes quality coverage for these workers. Right now, if
they are unable to obtain coverage because of a pre-existing
condition, they can choose to join a high-risk insurance pool,
which is available in every state. In 2014, self-employed
individuals will also be eligible to shop for health care coverage
in the exchanges and receive a tax credit for doing so.
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Racial and
ethnic minorities are currently less likely to have access to
employer-sponsored insurance than non-Hispanic whites, so they will
benefit substantially from the new exchanges.
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This support
system will make insurance more affordable for the individual, and
it will accordingly lower costs for his or her business. These
provisions reduce the burden of health care costs on minority
self-employed individuals, and it thus incorporates underserved
racial and ethnic groups into a more robust health care system. The
health care reform law is a landmark opportunity to close the
disparities gap.
