Health insurance coverage proposals threaten small businesses
You've probably heard a saying that goes something like this: When California sneezes, the rest of the country catches the flu.
The metaphor describes how the Golden State frequently sets trends that sweep across America like a virulent infection. Sometimes the trends are harmless, even fun, such as skateboarding or roller-blading. Other times, the standard California sets is ultimately beneficial, such as those that have led to lower vehicle emissions and cleaner air.
But there's a health-care proposal in the California Senate that has small-business owners worried about its potential to spread. A bill intended to reduce the number of uninsured, working-age Californians and their dependents would do so by requiring employers, including all small businesses, to spend at least 7.5 percent of their payroll on health insurance.
Employers who spend less than that now will pay the state the difference between 7.5 percent and what they now spend. Those who don't offer any health insurance would be required to pay a 7.5 percent payroll tax. The money would help pay for private insurance plans for those who can't obtain health insurance through an employer, or who fall below a certain income level.
Could this idea become trendy as well? Already, Wisconsin has raised the bar with a similar plan that would impose a stunning 14.5 percent tax on employees and businesses, on top of their current federal and state taxes.
At first glance, a plan to require health insurance coverage for all may appear to be a good idea. And in fact, most businesses recognize that they need to help contribute to solving our health-care crisis in some way, and they understand that a good benefit plan helps attract and keep talented employees. But why should the government force employers, including the smallest of businesses, to shoulder this burden?
The California proposal doesn't recognize that some business models simply can't afford these additional costs. Nor does it make any distinction between a business with one employee and a corporation with 50,000 workers. In addition, the economic consequences could be devastating.
A recent study by the National Federation of Independent Business' Research Foundation shows that the California plan would cost employers an additional $8.3 billion in taxes, administrative and other costs. Businesses would lose approximately $67 billion in sales, and the plan would lead to 249,000 lost jobs within five years of the proposal becoming law.
The bulk of those job losses, about 160,000, would come from small businesses, particularly retailers, food service, construction and professional and technical services. This would completely reverse recent history, during which most of the net new jobs in America were created by small businesses.
If we truly want to provide coverage for all while protecting our economy, the real focus should be on small business' biggest concernthe cost of health insurance. Reduce costs, and we can increase coverage.
To do that, we should increase competition by breaking down the barriers that exist to selling insurance to small businesses across state lines and provide a wide variety of choice of insurers and coverage plans. There also should be complete transparency in the costs of treatments and the outcomes of those treatments so that we can make informed decisions. In addition, we need to make health insurance portable from job to job, which also would encourage more would-be entrepreneurs to follow their dream and start a business without worrying about losing coverage.
We all need to become better-educated consumers of health care. By shifting the burden for providing health insurance completely to businesses or the government, there's no incentive for any of us to take control of our health. Aren't those decisions we should make for ourselves?
- Todd Stottlemyer is president and CEO of the National Federation of Independent Business in Washington, D.C.