Report: Health-Care Reform Will Save Small Businesses Billions

By Marc Tracy

A premise: health-care reform is going to happen. Perhaps the most credible source on this is none other than President Bill Clinton, whose utter and debilitating failure to enact health-care reform back in the early '90s is the ultimate object lesson for reformers today. He tells the New York Times, "[President Barack Obama's] got a better Congress, a more receptive climate. He also has, frankly, a better--at least more politically saleable--set of proposals.” Obama--wisely, in light of Clinton's failure--has laid out broad principles and a mandate for change, and has left it up to the House and Senate to pass a specific bill. Ezra Klein of our washingtonpost.com brother Website has a fantastic rundown of the various potential shapes the reform could take, and specifically how the so-called "public plan" features in each of them. Klein is a progressive, and admits to favoring the progressive option, but the post is admirable for its objectivity and fair-mindedness. Definitely give it a read.

A second premise: small businesses need health-care reform as much as anybody. Well, maybe not as much as the over-40-million uninsured Americans. (Then again, many of these work at or even own their small businesses!) The fact is, as we discussed last week, the current health-care system is anti-small business. Why? Because it relies primarily on employer-provided benefits, and because of the way in which employer-provided benefits work, it is far cheaper for big corporations to insure their workers than for small businesses to do so--creating either an extra expensive burden for small businesses that offer insurance, or a hiring disadvantage for small business that don't. In addition to all that, the current system sharply discourages entrepreneurially striking out on one's own. The point is: Change has to happen.

Now, a new article explains how and why reform could turn out to be a great thing for small businesses.

This morning, the Times reported on a new report from the group Small Business Majority (download it here). The report's conclusion? "The changes"--the reform proposals currently under consideration--"would be better for small employers than continuing the current system, which leaves many of those businesses struggling to afford health benefits for their workers." Among the potential "changes" is an employer mandate--a requirement that businesses provide health insurance for their workers.

Specifially, "the changes" would save small business a bundle. "The proposals under debate could save small businesses anywhere from $546 billion to $855 billion over the next decade. If nothing is done, on the other hand, the study says the health care bill for small businesses--estimated at $156 billion this year--would more than double, to $339 billion in 2018."

Where would the savings come from? The savings would come both through placing small businesses on a more level playing field with big corporations as far as employees' insurance is concerned, and through the much, much broader and drastic lowering of spending on health care that a more carefully overseen system is predicted to provide. (This is what Obama talked about yesterday in Green Bay, Wis.; and what this superlative New Yorker article discusses.)

In addition, remember: any system that gave all workers insurance--whether through an employer mandate or a public plan that anyone could opt into--would eliminate the advantage big corporations currently enjoy in terms of using superior insurance to lure superior talent to their employment ranks.

Some groups--the National Federation of Independent Business, for one (which, to its credit, has acknowledged the need for significant health-care reform)--will oppose any plan that mandates that small businesses provide health insurance to their employees. Even Obama, as we reported, has said that small businesses deserve special consideration where mandates are concerned; and in fact, though he is open to mandates generally, they were notably absent from the plan he offered during the presidential campaign.

So we're a bit more sanguine on how any final plan will affect small businesses, especially since we would think relevant elements of the SHOP proposal--which we laid out here--would be included.

This isn't just among the country's central domestic issues right now. Small businesses happen to lie at its very epicenter. Rest assured, this will not be the last lengthy post about health-care reform and small businesses that appears on BizBox.

Comments (2)

June 12, 2009 9:27 AM