As every small business owner worth their bottom line has long known, the ability to offer a comprehensive benefits package is key to both attracting and retaining the best employees. But in the past few years alone, the rising cost of health insurance has left many entrepreneurs contemplating cutting health benefits or at a minimum, cutting back on their contributions, and they are anxious for Congress and the White House to enact meaningful reform.
According to the National Small Business Association (NSBA), premiums have increased by 119% since 2001, outpacing the rate of inflation, which has increased by 29% during that period. A Kaiser Family Foundation study has found that between 2000 and 2007, the percentage of small businesses offering health insurance dropped from 68% to 59%.
For months, insurers, pharmaceutical companies, and hospitals have been working behind the scenes, making deals with the Obama administration to signal that they’ve accepted the inevitability of healthcare reform and are finally ready to get on board. Small business owners and their advocates finally had their say on the issue last week at White House and Capitol Hill roundtables, while lawmakers in both chambers of Congress engaged in deep debate over how best to solve the problem of providing coverage to all.
“Everyone in Washington is talking about healthcare and rightly so, ” said Vice President Joe Biden at the White House’s Middle Class Task Force roundtable on the rising costs of healthcare. “It’s perhaps the foremost economic–and moral issue–that this administration is determined to do. But not everyone is talking about you all and I’m here to tell you that small business employees and employers are not a small concern to us.â€
Anthony Harris, president of American Capital Contractors, attended the White House roundtable and recounted an experience that encompasses every small business owner’s nightmare. Currently, Harris pays 100% of the insurance premiums for 63 employees, an expense almost equal to his payroll. His insurer recently covered 80% of the expenses for one employee’s cancer surgery, but the remaining costs forced the woman to declare bankruptcy. Further, the company’s premium rate will soon increase based on this one employee’s illness.
“We haven’t always been able to afford insurance and I’m not sure how much longer we’ll be able to,†said Harris, who plans to require employees to contribute.
Although House Democratic leaders and the Obama administration are committed to offering a public option, entrepreneurs and advocates are divided. The NSBA, for example, says that a public insurance option could do more to undermine than enhance market reforms.
“If they reform the marketplace and hold insurers accountable, I don’t think you need a public plan to achieve what’s needed,†says NSBA President Dodd McCracken.
Charles Davis, president of Technology, Automation & Management Inc., disagrees. His company, which employs 35 people, pays 95% of single-coverage premiums, but just 60% for family coverage because it is so much more expensive.
“The public option will increase competition and make the for-profit insurance companies become more competitive in pricing,†said Davis.
Most small business stakeholders also support the concept of an insurance exchange, which would enable them to reap the benefits of large-group rates and a greater choice of plans currently offered only to large employers.
Anthony Evans, executive vice president of ANCON, which he co-owns with his wife, pays 80% of the premiums for the 80% his 25 employees who opted for coverage, some of whom work and live in six other states. Because those premiums increased by 20% in the last quarter, the company will soon pay just 50%. He believes an exchange would offer greater choice and help contain costs.
A plan last week to unveil a healthcare bill on the House floor was blocked by the Blue Dog Coalition of fiscally conservative Democrats, who are concerned about the lack of deficit neutrality and inadequate small business protections.
Although lawmakers are still scrambling to settle these and other differences with other caucuses, Democratic lawmakers hope the bill will be introduced Tuesday.