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Small business and health reform

Posted by: Ella Hushagen on Apr 29, 2009

Last week, the White House released a report pointing out that small business stands to gain a lot through health care reform. Small businesses are the lifeblood of the American economy, but the current health care system blocks their progress and innovation. The burden of health care costs on small business has implications for all of us.

According to the report,

Half of workers in small firms that do not offer health benefits are uninsured.... [Between 2000 and 2007] the percentage of small businesses offering coverage dropped from 68% to 59%, while large firms held stable at 99%.

More and more hard-working Americans are joining the ranks of the uninsured because their employers cannot afford to provide health benefits. For workers who are lucky enough to retain their health benefits, many have seen the quality of their coverage erode:

In the past two years, more than half of small businesses that offered coverage reported switching to plans with higher out-of-pocket costs in response to rising premiums. Another third switched to a plan that covered fewer services.

These numbers are bad for small business and bad for the economy as a whole. When employers can't provide quality health benefits, it hurts their ability to retain good employees and to keep their workers healthy and productive. And these dire statistics may discourage an entrepreneurial employee of a large firm from starting his or her own business, or even joining a start-up.

Small business leaders recognize this hindrance on their growth and performance, and

Nearly half of small business owners in a recent survey said that "making health care more affordable" is the idea Washington should address first.

Many of the options being discussed in Washington would be a big help to small business. These include things like prohibiting insurance companies from discriminating against small firms based on the health status of their employees, providing an insurance purchasing pool businesses could use to cut down on administrative costs, offering subsidies to low-wage workers to help them afford coverage, and offering additional subsidies directly to some small businesses so they can afford to offer coverage to their employees.