San Diego Union-Tribune –
Oct. 12: Cathy Jamieson and her husband struggle to maintain health insurance coverage for workers at their small plastics molding plant in Chula Vista. Premiums at American Design have doubled over the past three years, annual deductibles have climbed to as much as $10,000 per family, and the company has turned to three different insurers to find affordable options for its 12 employees, Jamieson said.
With the recession killing more than half of American Design’s business, Jamieson worries that medical benefits might soon have to go. “I don’t know where we’re going to be next year,” she said.
If Jamieson is confident of anything, it’s this: The health care reform proposals now winding their way through Congress won’t make things better for American Design. She fears the price for extending coverage to most of the nation’s 46 million uninsured will fall on business owners like her.
While small businesses around the country have rallied around legislative measures that would force insurers to accept all applicants and offer government subsidies to low-income workers, they’ve winced at mandates to provide coverage for every employee or pay a penalty equal to as much as 8 percent of payroll.
“They really want reform, but then there are the ones thinking, ‘How much will this cost me, and will it hurt my business?'” said Amanda Austin, the lead Washington, D.C., lobbyist for the National Federation of Independent Business. “It’s a little bit of a mixed bag.”
About 70 percent of the small-business owners in California who provide health coverage to workers are straining to continue the benefit, while 86 percent of those who don’t blame high premiums, according to a poll published in August by the nonprofit Small Business Majority, a national group based in Sausalito.
In a separate study, the organization concluded that health reform legislation as currently envisioned in Washington could cut small businesses’ medical costs by as much as $855 billion nationwide over the next decade.
“The basic framework in D.C. is certainly much more helpful to small businesses than doing nothing,” said John Arensmeyer, founder and CEO of Small Business Majority. Overall, the small-business community’s mixed reactions help to explain why its voice largely hasn’t been heard in recent months amid intense debates on Capitol Hill and in town hall meetings nationwide.
Unlike big corporations and generously funded special interest groups, most small-business owners are too busy running their shops, bakeries, salons, restaurants and professional firms to study proposals that fill thousands of pages.
“It’s an incredibly complex issue,” said Marshal Scarr, a partner in the downtown San Diego real estate law firm Peterson & Price. “It’s hard to know what is the best thing to do, and it’s hard to know what is realistic and effective.”
Small businesses, the self-employed and those with fewer than 500 workers number 26.9 million. They employ roughly half of the nation’s work force or more than 60 million people, according to the National Small Business Association.
California had 637,730 companies that each employed fewer than 20 workers in 2006, the most recent year for statistics from the U.S. Small Business Administration. The figure accounted for 88 percent of all companies in the state that year.
Health care analysts generally agree that small businesses have fewer options than large corporations for dealing with ever-rising medical costs, including the ability to use large numbers of potential enrollees as leverage during negotiations with insurers.
Forty-nine percent of U.S. companies with three to nine employees and 78 percent of businesses with 10 to 24 workers offered health coverage last year, according to a July report from President Barack Obama’s Council of Economic Advisers. In contrast, the council reported, 99 percent of companies with more than 200 workers provided health insurance.
The reform debate took on sharper focus last week, when the nonpartisan Congressional Budget Office said the leading Senate bill would extend coverage to 29 million people at a cost of $829 billion over 10 years while reducing the federal deficit by $81 billion.
That measure is moving through the Senate Finance Committee, which is expected to vote on it tomorrow. The legislation is widely seen as having the best chance of winning support from liberals, moderate Democrats and a handful of Republicans in Congress, giving it enough votes to proceed to Obama’s desk.
National associations representing small businesses have responded more favorably to this Senate proposal than they have to plans crafted in the House. “We think it gets closest” to the interests of small companies, said Austin of the National Federation of Independent Business.
Her organization, which lists 2,200 members, has vigorously opposed the “pay or play” option. Under that provision, companies would be required to shoulder at least 75 percent of the premium for single employees and 65 percent for families or agree to increases in their payroll taxes.
Supporters of the measure said exemptions would exclude as much as 91 percent of small businesses from the penalty, but that hasn’t dampened the criticism. “It’s not a great idea in a good economy, and it’s a bad idea in a bad economy,” Austin said.
The leading Senate proposal does include a “pay or play” provision that would apply to businesses with more than 50 employees. Rather than imposing higher payroll taxes on companies that don’t offer health insurance, it would fine them up to $400 for each worker receiving government-subsidized coverage outside work.
In addition, groups advocating for small businesses back the creation of exchanges where health insurance plans can be compared against one another in an effort to boost competition and drive down prices.
What small-business owners want most from a reform plan is assurance that skyrocketing health costs will be reined in, said Bill Hammett, a health insurance agent and president of the San Diego Association of Health Underwriters. Many companies have watched premiums rise as much as 15 percent annually in recent years.
At American Design, the annual insurance premium has climbed from $2,200 to $4,400 in the past three years while deductibles continue to go up, Jamieson said. The company pays 50 percent of the bill.
Several workers have stopped buying health insurance because of the increases, Jamieson said. “Business owners want to help their employees access health care, but they can’t do it at the expense of keeping their doors open,” Hammett said.