President Obama’s signing of the $797 billion stimulus bill will hopefully help lift the economy, but for many small business owners the measure was a mere sideshow to a much more important debate looming on Capitol Hill.
In survey after survey, small business owners have said that health care is their chief concern, exceeding even taxes and the credit crisis. During the presidential campaign, health care was also a key issue, and Obama vowed to make more affordable and more widely available health care a key priority of his administration.
So the stage was set when voters went to the polls in November. Although the economic rescue plan topped the president’s agenda, lobbyists and small business groups were gearing up for the looming confrontation over health care even as the stimulus bill was still being hotly debated on Capitol Hill. Health care is likely to move to the front burner, if not immediately, then certainly before the end of the year.
The House Small Business Committee recently held a hearing to explore how the flagging economy is affecting the availability of health care for small firms. It also heard testimony on proposals to reform the current system.
Affordability is the single biggest challenge facing small businesses today, according to Alissa Fox, a lobbyist who testified on behalf of the Blue Cross Blue Shield Association, which represents state Blue Cross and Blue Shield plans around the country.
Average health insurance premiums for family coverage for small employers have more than doubled from $5,683 in 1999 to $12,091 last year, according to a 2008 study by the Kaiser Family Foundation. A separate survey by Fox’s association found that 61 percent of small firms did not offer insurance because owners did not think their employees could afford to help pay the premiums.
Large employers haven’t been immune from rising costs. Since 2004, average premiums for a family policy have grown by 24 percent at small firms and 29 percent at large firms. Since 1999, the increase is even more pronounced: 113 percent at small firms and 122 percent at large ones, according to the Kaiser study.
Rising premiums have forced small business owners to make tough choices. Janette L. Davis, who has an MBA and is a certified public accountant in Florida, owns and operates Southeast American Financial Group with her husband. In 2007, their insurance premium increased to $1,400 per month, forcing them to switch their company policy to one that offers a high deductible health savings account. Although their premium is now $881 a month, they must pay the first $3,000 of their expenses each out of their own pocket, including prescriptions.
Even so, she says the insurance company constantly games the system to require them to pay. “My doctor recommended that I do a colonoscopy for preventive purposes. During the procedure, the doctor discovered that my colon was working too hard. Consequently, my health insurance company determined that the procedure could not be classified as preventive and charged me $562.50,” she said.
If anything, the hearing demonstrated that the nation’s health care system is a lot like a squishy ball. Squeeze it one way, and it bulges and distorts somewhere else.
The health care squishy ball is a gluttonous mass of state and federal regulators, health care providers, hospitals, health maintenance organizations, insurance companies, large corporations, small companies, sole proprietors, and individual consumers. Squeeze one and another stretches and distorts.
The likely starting point for the debate will be Obama’s campaign proposal for a broad, two-tiered public-private health care system. Under the plan, companies could continue to provide coverage and receive tax deductions to cover the costs.
Businesses that do not offer, or choose to drop, coverage would pay a payroll tax instead. For businesses that want to escape the uncertainty of rising insurance premiums and administrative burdens, the payroll tax would be an attractive option because it would be less prone to unpredictable increases.
For others, however, any new cost would be too burdensome. Obama has modified his position, promising to exempt some small firms from the tax. As yet the size and type of small businesses eligible for exemptions is yet unspecified.
The plan would create a huge national pool or health insurance exchange. Costs would be spread across all pool members, and no one could be denied coverage based on their health. Presumably the pool would supersede state mandates. Workers without employer-sponsored health plans would have the option of choosing among private plans or a public option based on the same plan now offered to federal employees and members of Congress.
How close the administration sticks to its original vision is open to question. Many advocates are trying to determine from the stimulus debate how far Obama will go to stick to his health care vision and how much he will be willing to compromise. So far, compromise seems to be the order of the day.
But that’s been the problem with health care reform in the past. Lobbying by varied interests, from the insurance industry to the American Medical Association, has been so intense that real reform has been impossible to achieve. As such, the Obama administration’s penchant for compromise on the stimulus bill does not bode well.
Real health care reform will be a far tougher issue to crack, and the fear is that the administration will produce more half-measures that fail to address the root causes of the nation’s health care crisis. Let’s hope Obama is more like Teddy Roosevelt in this debate. Speak softly but carry a big stick. And be ready to use it.