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The Small Business Health-Care Conundrum
By Marc Tracy
Small businesses took another step towards the center of the health-care reform debate Wednesday, with key senators disagreeing over whether an insurance mandate--basically, requiring Americans to have health insurance (much as drivers in many states are required to have auto insurance)--might erode employer-sponsored insurance and, what's more, disadvantage small businesses.
The key issue is this: any mandate program, which would involve government subsidies to the less-well-off, would all but demand the levying of penalties on employers who don't offer health insurance to their employees. In fact, it is precisely those penalties that would help avoid the erosion of employer-sponsored insurance--itself a crucial political goal, since it was the widely perceived threatening of such insurance that is believed to have derailed the previous major push for health-care reform, in 1993.
But penalties would fall on those businesses that don't provide insurance. And, given the basic statistics, and the way in which the current health-care system fundamentally disadvantages small businesses, that means that the penalties would fall disproportionately on small businesses. Which is obviously unfair.
So what's the solution? Well, the immediate, obvious answer would be to exempt small businesses from any requirement. No less than President Obama said he would be open to such an exemption, as we noted a couple weeks ago (and as today's article reiterates). House Democrats have said their bill will exempt some small businesses. Sen. Max Baucus (D-Mont.), who from his perch as Finance Committee Chair may be the single most important legislator when it comes to health-care reform, suggested tax credits rather than outright exemption, saying of the latter option, "We talked about it. But how much sense does that really make?”
We hate to say it, but he does have a point. Treating small businesses the same as big businesses in terms of requiring insurance is clearly unfair. But simply exempting them may add unacceptable strain to what would be the government's already-daunting obligations to the otherwise-uninsured, whether they take the form of subsidies or some sort of public-plan option. It might even have the perverse effect of decreasing the number of small businesses that offer insurance, which could in turn give bigger employers that much larger of an advantage in attracting top talent.
It seems like a circle to be squared. And a circle that needs to be squared, if we want to save small businesses billions and billions of dollars.
Comments (1)June 25, 2009 4:06 PM
Comments (1)
I think that is fair enough for the owners of small businesses since insurance is still a big stash on their finances.
Posted by Jenny Molina | June 27, 2009 2:52 AM
Posted on June 27, 2009 02:52