Under-reported: Small Businesses Would Benefit from Health Insurance Reform

This diary is cross-posted at Blue Commonwealth

In the 1960s my father-in-law provided health insurance for employees of his small business.  Little did we know how ahead of his time he was.  A survey by the Small Business Majority found that even today only 46% of small business owners provide health insurance, but 76% of them struggle meeting their premiums.  The 54% who do not provide coverage say they cannot afford it.  Let me pause here: The majority of small business owners do not provide health insurance for their employees. It is their employees who most likely are caught in private individual plans which get slammed over and over and which get canceled at the drop of a hat.  Some companies drive up the cost of policies solely to induce “high risk” patients to drop their policies.  It is clear that both individuals and small businesses need both relief and reform.

Meanwhile, the upward trajectory of health care costs for small businesses continues.  In 2009 costs are around 3.42 billion.  MIT economist Jonathan Gruber estimates they will go up to around 7.43 billion in 2018.  One of the most vocal opponents of health insurance reform is the national Chamber of Commerce, which runs particularly troublesome and questionable ads.  They do not get it.  Not only would health insurance reform reduce personnel costs, a real public option would could ultimately produce far greater savings.  With Medicare overhead costing only 4%, private insurance pales in efficiency of delivery.  Further efficiencies in delivery of Medicare services, such as elimination of over-payments to the so-called (fake) Medicare “Advantage” plans and greater effort at fraud reduction will drive home even more savings.  (Proponents of reform failed utterly to explain these over-payments and their ruinous effect on the future of Medicare.  It is the absence of reform which hurts Medicare.)

While most of the conversations about health care have focused on how it will affect individuals, little has been offered regarding the benefits of reform for small business, the primary engine for job growth in a market where larger companies often offshore and downsize.

Here are just a few examples to add to the reform aspects mentioned above:

• Exempts small businesses (<50 employees) from sharing insurance premium costs with employees.  That means 96% of small businesses would not have to pay part of the premium.  

• Reduces costs and increases negotiating leverage by creating exchanges which encourage competition among insurers to the benefit of small business and the self employed.

• Provides individual tax credits on a sliding scale for about 25 uninsured million Americans.

• Implements many cost-containment provisions.

–electronic records,

–paperword simplification,

–changind the way doctors and hospitals are paid (better results not number of procedures and tests),

–new alternative system of statewide not-for-profit coops.

• Beginning in 20010 gives small business tax credits for those small businesses offering insurance.  This should help 3.6 million companies better afford health insurance for their employees.

• Provide new regulatory authority to prevent large, unjustified increases in premiums, as happened recently in both CA and MN.

• Ends discriminatory practices particularly injurious to small businesses and the self employed, such as raising rates based on health status, age, or pre-existing conditions.  

• Reduces the federal deficit by $130 billion over the next 10 years.

Given that there is no employer mandate in the health care bill, I am baffled at the behavior of some supposedly pro-business entities opposing reform.   Their behavior seems more political/partisan than rational.  Although there are shortcomings in this bill (particularly that it doesn’t go far enough in reforming the system or provide a truly public option), hurting small businesses isn’t one of them.