The Rising Cost of Healthcare…Can Small Business Keep Up?
Three words. Health Care Reform. Combined, they have become a hot topic in recent months. Although the thought of any reform on America's health care will affect all Americans, a special group of interest is small business. As Capitol Hill struggles to create a bill that will satisfy all, small businesses face a critical turning point in regards to keeping up with healthcare changes.
The Importance of Small Business
According to the Council of Economic Advisers, the White House recognizes that small businesses are important. For starters, the White House recognized how large a role small businesses play in the private sector. In 2006, 89% of such firms had a count of 20 or less employees. The White House also recognizes that small businesses account for nearly 25% of the new employment growth from 1992 to 2005. Lastly, a report noted that "despite their size, these small businesses account for a substantial majority of jobs in start-ups." It would appear that, when working on health care reform, at some point there should have been an examination as to how the reform would impact small businesses. Hindering small business would not be wise, as many of these companies provide "innovation and growth in the economy."
Why the Current Health Care System Doesn't Work
Our current health care system does more harm than good to small business because of costs. With large broker fees and fixed pricing, at times small businesses pay close to 18 percent more than a larger business would for the same health insurance. As a result, it's not uncommon for some small business to not offer health insurance. This is detrimental to the business, as this benefits gap could lead to talent retention concerns. It is also detrimental to employees, as many could not receive health insurance. A report conducted by the Council of Economic Advisors noted that from 2002 to 2008 business with 3 to 9 employees that offered some form of health insurance declined from 58 to 49 percent. According to the 2008 U.S. Census Bureau 46.3 million Americans are living without health insurance. Clearly, the current health care system has room for enhancement.
Has Congress Found A Solution?
According to the White House's website, the Obama plan for health reform will
• Provide tax credits to small business that qualify, in order to assist individuals and small business in providing quality health care,
• A public health insurance option, and
• Create a new health insurance market called "The Exchange."
Health care reform is a heated debate, as many small & large businesses weigh in. Many question what the qualifications will be for the supposed tax credit. Health insurance companies may not find the recently agreed tax on high-priced health insurance pleasurable either. Many are also concerned on whether the reforms, including the public health insurance option, will change the patient-doctor relationship. Also under consideration is whether this approach will change the quality of health insurance or medication for the patient. Others question the cost of individual taxes in order to support such a huge reform.
Small businesses however, may want to consider the costs and options that such a bill would provide. As one Business Week article pointed, "Would this be better for our employees? Maybe yes, maybe no. But at least it's something. A lot of employers are providing nothing. Some employers may be offering and paying too much. Will we all opt for this option? Maybe yes, maybe no. Some of us may want to offer better plans to our employees to gain a competitive edge or because we place a higher value on this kind of employee benefit." The article also highlighted that with a national health plan option, business owners would have less expensive health care options to provide to their employees. It would force insurance companies to lower costs, and give small businesses options.
Currently, the Senatorial election in Massachusetts stalled the progress of health care reform. However, the debate will continue. If the health reform President Obama wishes to enact moves forward, it is possible that this plan could benefit small business. In the meantime, however, all of America continues to watch closely the saga that health reform has become.