Tuesday, December 1, 2009

Health Reform and Nonprofits

By Claudia Damon
Director of Advocacy, NH Center for Nonprofits

Two of the truths in the current healthcare reform debate are that health reform matters to nonprofits and nonprofits matter in planning health reform.

Nearly 8,000 NH nonprofits employ nearly 14% of the NH workforce. Nationally there are 13.5 million nonprofit employees. They all have a stake in health care reform as their employers face one of the biggest challenges faced by all small businesses–paying for employee health care coverage in a world of skyrocketing costs.

Nonprofits play a vital role in the community and in the economy, even more so these days of increasing needs and diminishing resources. And often the services nonprofits provide and the infrastructure required to offer those services are competing for dollars with health insurance costs.

The NH Center for Nonprofits has joined with the National Council for Nonprofits and with NH Voices for Health to provide nonprofits the latest information about health reform and to provide the New Hampshire Congressional delegation with information about the nonprofit sector and why health reform really matters a lot to nonprofits.

How federal legislation addresses nonprofitsFederal legislation consists of a bill passed by the House of Representatives and a proposed Senate bill that will be debated in the Senate after Thanksgiving recess.
On November 7, 2009 the House of Representatives passed its health reform bill. The affordability provision for small businesses is in the form of a tax credit on income tax. Tax-exempt nonprofits cannot take advantage of that. There is no provision specifically aimed at nonprofits to make health insurance costs affordable to nonprofits.

The Senate bill to be debated after Thanksgiving recess was crafted by Senator Harry Reid and provides a two year sliding scale tax credit to help provide health insurance to employees. The tax credit is an income tax credit to small businesses that pay for employees’ health insurance coverage and a payroll tax credit to small nonprofits that pay for employees’ health insurance coverage. To be eligible for a tax credit an employer must pay at least 50 percent of the total premium cost or 50 percent of a benchmark premium and must have no more than 25 FTE (full-time equivalent) positions with an average annual wage of no more than $40,000. The full amount of the credit is also available to employers with ten or less FTE if they have an average annual wage of less than $20,000. Nonprofits can receive up to 25% of their payment for employees’ health insurance in 2011 and 2012. Small businesses get up to 35%. When the exchanges are operating in 2013, nonprofits can receive a 35% credit for up to 2 years. Small businesses get up to 50%.

 Why health reform matters to nonprofits

Health reform matters to nonprofits because of sustainability, jobs and wages.

Sustainability
Health insurance costs more for nonprofits.
• Nonprofits’ health insurance costs are rising more than twice as fast as the national rate. “Over a third (36%) of respondents offering health benefits reported increases of 11% or more in their total direct health insurance costs [during the last year]. By comparison, national health insurance costs are rising by an average of 5% per year.” Johns Hopkins Listening Post Communiqué No. 15: “Health Care and Nonprofits: The Hidden Dimension of America’s Health Care Crisis.”
• A Boston Foundation study of Massachusetts nonprofit benefits, published in 2009, found that a little more than half the small nonprofits with budgets under $250,000 offered employees health insurance benefits and they paid 20-22% more for coverage than larger nonprofits. http://www.tbf.org/uploadedFiles/tbforg/Utility_Navigation/Multimedia_Library/Reports/Benefit%20Report%202009_R.pdf

•The President’s Council of Economic Advisors reports that small businesses pay up to 18% more than larger businesses for the same health insurance coverage, with the result being that most small businesses do not provide health insurance for their employees. http://www.whitehouse.gov/administration/eop/cea/Health-Care-Reform-and-Small-Businesses/  Nonprofits cannot handle higher health insurance costs.

• Across the country, drops in donations and grants, budget problems on state and local levels are occurring at the same time as the need for services is increasing. Nonprofits suffer the same revenue squeeze as businesses and government. There is no extra pot of money that can be used to pay for health insurance.

• In the face of health insurance costs that continue spiraling upward, nonprofits can choose from a menu of unattractive choices, all threatening to erode the work nonprofits do. In no particular order, the choices are to reduce wages, shift to part-time employees, reduce coverage, increase employees’ contribution to coverage costs, drop coverage entirely, and/or reduce services. These are tough choices in our communities where the needs increase daily and the resources can’t keep up.

• Research reveals that a third of nonprofits have already cut services delivered because of declining revenues and escalating operating costs – especially health care costs. See National Council of Nonprofits’ Special Report No. 8: “A Respectful Warning Call to Our Partners in Government: The Economic Crisis Is Unraveling the Social Safety Net Faster Than Most Realize” (read the report at http://www.councilofnonprofits.org/files/Special%20Report%208%20-%20A-Respectful-Warning-Call-to-Our-Partners-in-Government-The-Economic-Crisis-Is-Unraveling-the-Social-Safety-Net-Faster-Than-Most-Realize.pdf)
Jobs and Wages
Nonprofits need to be able to offer competitive pay packages that include benefits in order to attract and keep good employees who do the work that government and for-profit businesses do not at generally lower levels of pay. Health insurance is a popular benefit offered by nonprofits, but at the same time it is far from universal among the smaller nonprofits. Johns Hopkins Listening Post Communiqué No. 15: “Health Care and Nonprofits: The Hidden Dimension of America’s Health Care Crisis.”

A good outcome of health reform legislation would be for all nonprofit employees to have access to quality care through affordable health insurance. The nonprofit sector should not have to face losing good employees, or worse reducing services because they can’t afford health insurance bills that are increasing at twice the national rate.
A good outcome of health reform legislation is to bring to parity the health insurance costs of nonprofits and for-profit businesses. Both kinds of business are essential to the fabric of our country. Nonprofits who work for the public good should not be paying more for health insurance than for-profit businesses.

Why nonprofits matter in planning health care reform

The nonprofit sector is big and it is a significant force in our national and state economies. Nonprofits play a crucial role in our communities.

• At the national level, there are 1.8 million nonprofits of all kinds that employ more than 15.3 million people or 10% of the workforce. (1.2 million of those nonprofits are public charities.) Non profits employ
• 8.1 million more than the construction industry
• 10.1 million more than the finance industry
• 10.2 million more than the transportation industry
• 13.2 million more than the real estate industry
• More than hotels and restaurants, finance and insurance, public administration, transportation, utilities, agriculture, and mining.

 (see data ). Also see Johns Hopkins Listening Post Communiqué No. 15: “Health Care and Nonprofits: The Hidden Dimension of America’s Health Care Crisis,”

According to the National Council for Nonprofits, nonprofits produce 11-12% of the GNP. Yet 93.3% of the charitable nonprofits have income of less than $1 .

In New Hampshire, nonprofits are a powerful force in the economy and quality of life as they partner with government, communities and businesses to meet citizen needs Businesses rely on the services nonprofits provide to support the well-being of their employees and families. Government relies on nonprofits to provide a safety net for those in need. Communities rely on programs offered by nonprofits to enrich family life, protect the environment and respond in a crisis. Nonprofits touch the lives of every citizen in New Hampshire every day. They mobilize volunteers, charitable contributions and in-kind contributions alongside state and municipal dollars, making the government’s dollars go farther in serving public needs.
In early 2009, the New Hampshire Center for Nonprofits issued “Essential: A Portrait of the Nonprofit Sector in New Hampshire” . “Essential” showed us that:

• There are 7,817 nonprofits in the State.
   77.9% of nonprofits report revenue of less than $100,000.
   15.7% report revenue between $100,000 and $1 million.
   6.2% report revenue between $1 million and $100 million.
   0.2% report revenue over $100 million.
• 1 in 8 New Hampshire workers (13.8%) are employed by nonprofits.
• 14.5% of the State’s gross domestic product is generated by nonprofits; that’s $8 billion in revenue that is contributed to the State’s GDP by nonprofit organizations.
   That’s on a par with the real estate industry.
   That’s larger than the construction and hospitality industries combined.
• NH nonprofits matter to NH citizens
   334,000 persons volunteered for nonprofits in 2007, and they gave 40.4 million hours of service.
   4 out of 5 households in New Hampshire contribute to nonprofits, and $621 million in charitable deductions were claimed by NH tax itemizers.

Nonprofits are a force to be reckoned with in planning health reform. All of us have a favorite nonprofit that will allow us to visualize the effect of leaving nonprofits out of health reform. Excluding them from the benefits of reform is going to have negative effects on the people they serve, the communities they serve, the governments they work with, and the state and national economies.

Tags: advocacy, Citizens Health Initiative, federal legislation, Health Reform, New Hampshire, non-profits, nonprofits, reform debate

This entry was posted on Tuesday, December 1st, 2009 at 3:23 pm and is filed under Health Reform. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.