On Health Care Reform, Who Speaks for Small Business?

As the debate over health care reform heats up, both sides of the issue are increasingly invoking the plight of small businesses to score points about the benefits or evils of reforms under consideration on Capitol Hill.

The lobbying has become so intense, it’s spawned a corollary debate that is growing just as heated -- who really represents small businesses?

Although a half-dozen or so groups are nationally prominent, the National Federation of Independent Business, better known as the NFIB, has long claimed -- and is generally accepted -- to be the voice of small business in Washington. But long-held assumptions about the group are under question, if not assault.

A non-partisan, public policy organization in New York known as Demos, issued a position paper last year challenging the NFIB’s claim. The full article by Nicole D. Kazee, Michael Lipsky, and Cathie Jo Martin, titled “Outside the Big Box,” appeared in the July/August 2008 issue of the Boston Review.

The authors paid due homage to the group. While NFIB is relatively small -- 600,000 members compared to AARP’s 38 million -- it is remarkably powerful, they noted. In fact, Fortune magazine has frequently named it the most powerful business lobby in Washington.

Of significance to the current health care debate, the article credits the NFIB and local Chambers of Commerce with dealing the “decisive blow” against President Clinton’s health care plan in 1994.

Fast forward 15 years and the NFIB is once again a leading opponent of President Obama’s proposals. Two weeks ago, the group sent a letter to House lawmakers opposing two cornerstones of the Obama plan, an employer mandate and a public health insurance option. For its part, the U.S. Chamber of Commerce also sent a letter expressing the same position.

The letter prompted the Economic Policy Institute (EPI), a Washington-based think tank, to post a summary of the Boston Review article on its Web site, raising the question once again whether the NFIB truly represents small firms.

The NFIB claims it derives its authority to speak for small business through regular membership surveys. But the authors contend that the group has a clear ideological thrust: “It favors lower taxes; opposes minimum wage increases; and generally embraces small-government, free-market policies.”

Over the years, NFIB polls have uniformly reflected those views even though a variety of other polls suggest that small business owners are much more diverse in their economic and political preferences.

In various polls from the mid-1990s through 2006, for example, NFIB surveys claimed that only 25 percent of its members favored a government-funded single-payer health plan. NFIB surveys also routinely find that cutting taxes is among top small business concerns.

But a 2000 American Express poll found that more small business owners (82 percent) ranked “improving schools/training young people for work” and providing health care for employees (77 percent) over tax cuts (74 percent) and reducing regulations (72 percent).

In a separate 2008 study by the Robert Wood Johnson Foundation, 70 percent of small business owners favored government-managed health insurance purchasing pools, and two-thirds agreed that business should contribute to a reformed system along with government, the health care industry, and individuals, the EPI noted.

“Depending on the state, half to 80 percent of respondents agreed that businesses should pay something toward the health insurance of their workers,” according to the EPI.

In politics, researchers found similar anomalies. “On the eve of the 2004 presidential election, 95 percent of NFIB members said they planned to vote for George Bush, yet 41 percent of small business owners voted for John Kerry, and 39 percent of those were registered as Republicans,” the article noted.

In contrast, the NFIB endorsed 265 Republican candidates and only four Democrats in 2004, and 95 percent of its political action committee’s substantial donations went to Republicans.

By numbers alone, the NFIB also has scant claim to represent small businesses. Of the 27 million small business owners in the United States -- by Small Business Administration estimates -- only slightly more than one percent are NFIB members, they noted.

The authors concluded that the NFIB’s monopoly on small business issues is likely due to a more effective organization and a strategy that keeps “alternatives off the agenda.”

“As our analysis suggests, and experiences in Washington and the nation’s state capitals repeatedly reveal, the appeal of small business has been appropriated by a powerful interest group that does not fully represent the views of small business owners,” they added.

Not all small business groups, however, toe the NFIB line. The Main Street Alliance was founded last year and is building a network of state small business coalitions specifically to provide an alternative voice for small businesses on health care. Another non-partisan group, the Small Business Majority, is also working to enact health care reforms.

Lloyd Chapman, founder and president of the American Small Business League, has frequently taken an independent stance on issues, often contrary to the NFIB and the U.S. Chamber of Commerce. And the National Small Business Association also offers alternative views.

Health care is such lightning rod issue, when all is said and done, it could redefine the political landscape about who truly represents the best interests of the nation’s entrepreneurs. But one thing is certain, small businesses are far from monolithic, and no single group can rightly claim to speak for them in the current debate.