In all of the debate over healthcare earlier this month, one of the big concerns was small businesses who had health care plans for their employees. What were they going to do when the ‘public option’ was implemented? The solution was simple: give small business owners a tax credit of up to 35 percent of their health insurance costs. Insurance brokers around the country salivated at the prospect of small business owners lining up to by credit-qualified plans.

Eh, except that it really hasn’t happened.

According to an article in last week’s Bloomberg Business Week, few employers have dialed their brokers up. Why? Ye olde phaseouts, that’s why. The credit starts to dwindle once a company hits more than 25 employees, or $25,000 in average salary, and disappears completely by the time a company gets to 50 employees or $50,000 in average salary. That leaves employers in certain states (say, oh…..California!) which BW calls ‘high cost’ states, out of luck and with little to no credit. And since it’s based on average salary, one high-dollar employee (like, the owner, maybe?) can skew the average too high and blow the whole scenario. Of course, if it is the owner, the solution is simple – take a lower salary. Eh, but then you invite the IRS to come in and say that the salary is too low, and, well….bye-bye credit. So it’s  a losing proposition, and not exactly what the government had thought it was giving the more than 4 million businesses it contacted about the program.

Read the whole article here.