Healthcare reform: To help or hinder small business?

Published 6:56 am Saturday, August 1, 2009

Niles Daily Star

To insure or not to insure seems to be the dilemma faced by so many small business owners in America -and it is a dilemma that has been highlighted as of late, with the continuous debate about national healthcare reform.

Proponents of a national healthcare system say that reform means more competitive prices and more choices for small business owners who already face steep costs to provide employees with health insurance.

A White House report on the effects of healthcare reform on small businesses claims reform will fuel entrepreneurship and job creation.

“The U.S. health care system imposes a heavy “tax” on small businesses and their employees,” the report states. “Due to high broker fees, fixed administrative costs, and adverse selection, small businesses pay up to 18 percent more per worker than large firms for the same health insurance policy. Some of the higher costs are passed on to small firm employees in the form of lower wages and some eat into the profits of small businesses that could otherwise be used for research and development and for much needed investments.”

But if the matter of healthcare were simple – a seemingly endless argument over that very subject would not be taking place in the nation’s capital now, delaying a final piece of legislation until sometime after the August recess.

The debate, however, is not solely owned by federal lawmakers. Small business owners are weighing in on the subject.

“It seems like for the employee that’s working full time, the business should be able to provide health insurance,” said Wannis Parris, president and general manager of Delta Machining in Niles. Delta provides health insurance “for the employee,” Parris said.
For small businesses which, do as Delta does and provide health insurance to their employees, under the originally proposed legislation, met with plenty of opposition, a small business tax credit would be available “to alleviate their disproportionately higher costs and encourage coverage. The tax credit would be targeted to those firms with employees whose averages would fall below a certain threshold.”

It’s hard to tell just how much job creation and entrepreneurship could be created from a reform in healthcare – but the idea has been a big selling point coming out of the White House.

Over at Berrien Metal Products in Buchanan, president Larry Barrett said he thinks any decrease in cost or increase in employment would be temporary.

“I think it’s probably no doubt that insurance costs will probably go down for a little while,” he said. “But it’s short lived.”

Barrett believes that the problem of a poor healthcare system is the result of possible corruption existing somewhere between relations of the insurance companies, federal government and healthcare providers.

Though it is a considerable cost to his business, when asked why he continues to provide insurance to his 17 employees, which puts him in the primary demographic of small businesses the government is trying to focus on helping, he said, “I may be alone on the block. But I just don’t feel it would be right,” to provide himself with health insurance and not his employees.

Healthcare costs have risen at a rate that doesn’t seem to match up with inflation, he added – and in addressing the issue of healthcare, Barrett wishes that officials would answer why.

And he said he feels there is a misconception among the insured and uninsured alike. “No one has a right to healthcare,” he said. “The public has morphed into a misconception that we all have a right to healthcare when we don’t have a right to healthcare.”

And the small business owner raises the question of the purpose of insurance, saying that it was meant to cover the unexpected medical problems and that benefits now take into around routine or regular medical procedures.
Still, he said, he’s supportive of a move to reform the nation’s healthcare.

“I just don’t think we can sustain it,” he said. “I don’t think the money is there.”

Opinions like those of Barrett and Parris are not lost on Washington. In the White House’s report, the importance of small businesses in regards to the U.S. economy is stressed.
Looking at the country’s businesses by size and size of payroll, the report said “by either measure, the vast majority of firms in the United States are small, and these firms account for a substantial share of private sector employment.” It is estimated by the White House that “89 percent of firms had fewer than 20 employees in 2006 and these same firms accounted for 18 percent of private sector employment.”

That was before the significant change in employment over the last year. It seems the future of small business and healthcare’s influence remain uncertain and up for debate.