Governor Newsom’s Budget Revisions Offer Chance to Improve Healthcare for Small Businesses

Gov. Newsom’s revised budget released today 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 drastically reduce costs for small firms. 

One of Gov. Newsom’s proposals would extend additional assistance to individuals in the middle class who do not currently qualify for federal premium subsidies. This plan would significantly improve 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 percent and 600 percent of the federal poverty level (FPL).

Small business owners strongly support this 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 percent of the FPL. This is essential for many entrepreneurs because the average income of an incorporated small business is about $55,000 but the current cutoff for healthcare subsidies is about $50,000. We’re glad Gov. Newsom is proposing to make health coverage more affordable, and we encourage the legislature and the governor to ensure this proposal receives the resources it needs to be a meaningful subsidy.

Additionally, the budget proposal 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.

If adopted, these healthcare proposals would be 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.

Gov. Newsom’s revised budget also includes a proposal to increase the state’s paid family leave program offerings from six weeks to eight weeks. California already has a great paid family leave program because it allows employees to access this benefit without placing a burden on small firms, and there is always room for improvement. What’s more, we know paid leave insurance programs are widely supported by small businesses.

We are optimistic Gov. Newsom’s proposals will find wide support, and we hope California lawmakers approve funding for the governor’s ideas because they would greatly benefit small businesses.