Tip of the Month for July, 2009

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Tip: Monitoring Health Care Reform Debate

Most small-business organizations in the U.S. agree that the health-care system needs a major overhaul. But when it comes to the remedy, opinions vary. Some leading small-business groups recently announced their position based on results of their research and opinion polls. Not all are opposed to mandatory coverage requirements, though there are some major stipulations. Here's what small-business groups are saying about cost-containment, doctor access and health-care choices.

In its recent survey of micro-businesses (companies with 10 or fewer employees), the National Association for the Self-Employed found that small-business owners are generally mistrustful of federal government involvement in offering and managing health-care insurance.

Most survey respondents were strongly opposed to a "public option" - a health insurance program run by the government and open to anyone in need of health coverage. More than 70 percent said they would pick a private insurer over a government entity if both options offered the same coverage for the same price.

Ideas that appealed to small-business owners included (but were not limited to):

  • Small businesses banding together to purchase health-care insurance
  • overnment-organized insurance cooperatives (owned by the members) whose members can purchase health coverage plans

Citing an ailing economy and the skyrocketing cost of health care, micro-businesses were almost entirely opposed to the federal government imposing mandates on small-business owners. Some respondents were more supportive of the idea if they received significant subsidies, such as health tax credits to help pay for their employees’ coverage.

A program developed with the federal government is the solution for small businesses. Both parties consider tax credits to be effective in defraying health-care costs that might otherwise cripple small firms.

The problem extends beyond insurance affordability and the mandatory participation of all businesses. The NASE reports that small-business owners agree on the need to reduce overall health-care delivery costs. The nonprofit group believes that the current administration's proposals could save small businesses more than $500 billion over the next 10 years - even if mandatory participation is required. However, alongside this claim, the NASE also stresses that mandatory coverage requirements must address the fact that some businesses simply don't have the money for mandatory contributions. Small businesses want to be part of the system and recognize the importance of health-care benefits for their workers, but there has to be assistance in order for the smallest and least profitable businesses to participate.

An NASE analysis conducted by MIT economist Jonathan Gruber evaluates the reform proposals under current review, including small-business initiatives that would divert a portion of payroll to pay for health benefits in return for a tax credit. Without some sort of reform, small businesses could see their health care costs double to $339 billion over the next decade.

The National Federation of Independent Business, an association of small companies, believes reducing the cost of medical care should be the federal government's first priority. The majority of its members do not support proposals to force companies to pay a significant portion of employee health coverage costs.

The issues are numerous. Expect to see lawmakers debate various options, such as plans proposed by the administration, a bipartisan team and Republicans. Business owners might want to track the efforts of small-business organizations to monitor possible changes to the American health-care system.


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