Small Businesses Open To ‘Any Kind’ Of Government Intervention In Health Care

smallbusiness.jpgBob Laszewski points to an article by John Sinibaldi, a “well-respected health insurance agent in St. Petersburg, FL , [who] has become prominent in Florida’s broker community.” Sinibaldi argues that many small businesses would now accept some sort of government intervention in health care:

Across the board, the 100+ businesses I represent, all of them two to 50 full-time employees, have received increases between 13 percent and 75 percent this year. The average has been around 20 to 24 percent. That’s on top of more than 15 percent average increases last year, the year before, and the year before…So an increasing percentage of small businesses now feel that governmental intervention of ANY kind is preferable to the present untenable situation. In the small group marketplace, the pinch has been here for a long time, and has turned into a hard squeeze. Soon, it will squeeze the life out of the markets — at which point the small group market will implode.

The acceptance of “any kind” of government intervention is a departure from the rhetoric of 1993/1994, when the National Federation of Independent Businesses (NFIB) misrepresented Clinton’s employer-mandate as a crushing financial burden that would cost thousands of jobs.

Under Clinton’s proposal, “most small businesses that currently insure would have seen significant declines in cost.” Clinton’s plan capped total health care costs for companies participating in the new state-based alliances at 7.9 percent of payroll — dropping as low as 3.5 percent for the smallest businesses — provided discounts for the smallest low-wage companies and offered 100 percent tax deductions of health costs for the self-employed and independent contractors. But as Paul Starr explains, “few small employers understood that this obligation was limited to a share of payroll” and most “business simply did not trust the administration.”

Fifteen years later, small businesses may be more trusting of comprehensive reform. In fact, small business owners and their employees account for the largest share of the uninsured population—an estimated 27 million of the 47 million Americans without health insurance. Generally, small businesses have three major disadvantages when it comes to providing insurance:

Risk is shared by a smaller number of workers, which makes them more expensive to insure as a group

– Small businesses lose economies of scale, which makes their administrative costs more expensive

– Small business premiums can vary more from business to business and year to year, making premiums unpredictable and, in some cases, exorbitantly expensive.

Progressives have long maintained that insulating small businesses from growing health care costs would require “all interest groups — business owners, employees, the health care community and government” to contribute through the concept of shared responsibility. Such an approach would save small businesses from the inadequacies of the current system.

President-elect Barack Obama proposes establishing a health insurance exchange to connect individuals and employers to affordable insurance options. The plan establishes a large risk pool, spreads the cost and risk of insurance across a broad population, reduces the administrative costs of purchasing coverage, and ensures that premiums are set fairly and consistently. Small businesses would compare private coverage options with a public plan and purchase the most appropriate policy.