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The State of Play on Health Care

Posted by: John Tozzi on October 12, 2009

In time for the Senate Finance Committee’s expected vote on a health care bill Tuesday, small business advocacy group Main Street Alliance is planning events in 11 states to support a public health insurance option and what the group calls “a fair employer contribution.”

[Update: I checked with the group, and by this they mean the requirement in the House bill, which exempts companies with less than $500,000 in payroll. Firms above that threshold would have to provide coverage or face sliding-scale penalties of 2% to 8% of payroll.]

Along with the Small Business Majority, the Main Street Alliance has been pushing for health reforms from the left, in line with what most progressive advocates favor. That means a strong public option to compete with private insurers and drive costs down. It also means expanding coverage by mandating individuals (to buy) and employers (to offer) coverage. Those provisions would be coupled with tax credits to help small businesses shoulder the cost.

The position is on the other side of more established small business groups, notably the right-leaning National Federation of Independent Business, which helped kill health reform in 1994. The NFIB has fought any employer mandates and the public option, saying it will eventually put private insurers out of business and reduce choice. (The NFIB’s take on the current proposals is here.)

The Senate Finance bill in its current form replaces a public option with nonprofit “health care cooperatives.” Instead of an employer mandate, as the other major proposals in Congress have, the Finance bill has a “free-rider” provision. That would make companies with over 50 employees who don’t offer insurance contribute to any public subsidies their workers qualify for. As with the others, the Senate Finance plan includes tax credits to help small businesses afford insurance.

The big question is whether any health reform can rein in the runaway costs that force small businesses to drop coverage or limit benefits. For a look inside what drives those cost increases, take a listen to the health care special that ran on This American Life this weekend. And for more coverage on the reform bills and the lobbying behind them, check out BW’s Money and Politics blog and ongoing health reform reporting.

[Update, Oct. 14: I should clarify that Small Business Majority has not made a public option the same priority as Main Street Alliance. Here is part of SBM’s statement: “Small Business Majority supports a public option, however it isn’t the be-all and end-all of reform. Having a robust national exchange, available tax credits and strengthened support for the self-employed are more important components to comprehensive reform as far as small businesses are concerned.”]

Reader Comments

Levorn Robinson

October 13, 2009 10:30 AM

Health care reform is critical for small businesses. In order to remain competitive and attract some of the best workers to help facilitate growth in our respective industries, we have to be able to afford to offer health care. The current health care system does not help small businesses with its high costs and pre-existing condition exclusions. We are not looking for a free ride. We need a public option to compete with the private insurance companies. It's amazing that some people are more concerned that competition for the greedy, billion dollar insurance companies will drive them out of business, but don't care that the greedy insurance companies are forcing small businesses out of business.

Carol Cross

October 13, 2009 02:15 PM

Apparently, the NFIB also represents franchisors and their franchisees when it joins the International Franchise Association and lobbies The Congress for policy decisions and legislation.

So often, the interests of really BIG business franchisors is sold to the Congress under the guise of protecting small business. The NFIB personnel often join the IFA as employees when they leave the NFIB.

But, even the SBA Advocacy Committee acknowledges that the independent franchisee business person does not truly own a small business of his own in the true sense of the word, and is merely a contractual link in the franchisor's system. The franchisor, of course does operate a business that he owns but doesn't have to contribute as an employer to the wages and health care of those who provide the gross sales and the great profits of their systems.

Does the position of the NFIB mirror the position of the IFA in the matter of opposing a public health insurance option?


Curtis Rooney

October 14, 2009 11:37 AM

Speaking about the need to reign-in health care costs…Two recent studies highlight what I concluded some time ago—that group purchasing organizations or GPOs save the U.S. health care system billions of dollars annually. In July, Dr. David Goldenberg, formerly with Muse & Associates and Mr. Roland “Guy” King, former chief actuary for the Health Care financing Administration, found that GPOs annually save the nation up to $64 billion. Medicare and Medicaid realize savings up to $36 billion. In April, Dr. Eugene S. Schneller, from Health Care Sector Advances, found that GPOs generate overall annual savings for the U.S. health care system of $36 billion dollars. He also notes that without GPOs, labor costs for purchasing, for hospitals across the U.S., would alone increase by $1.8 billion annually. Dr. Schneller surveyed 429 hospitals and over three million hospital admissions. These savings allow hospitals and health care providers to dedicate more of their scarce resources directly to patient care, and also enable them to hire more doctors and nurses. I would encourage you to visit to learn more.

Carol Cross

October 14, 2009 04:33 PM

Apparently the GPOs are the middlemen who do profit from the negotiations with the hospitals and the medical services suppliers. etc. for group purchasing to the advantage of both the hospitals, the GPOs, the patients and Medicare and Medicade, etc..

In a recent article by All Business, it was stated that the Senate Committee is investigating the GPOs in an effort to verify the advantage to the government and to the public and perhaps are looking at the possibility of contributory revenue from the GPO's profits to help finance the new health care plan.

GPOs, of course, are really BIG business and do have the ability to set prices and indulge in kickbacks, etc.. and this is why the Senate wanted to take a closer look at them.

The government looked at GPO's before in 2001 and they were clean.

I don't know whether or not the Committee report has now been published for view by the public or whether or not the investigation is now complete?

Does anyone know?

Thomas Bowden

October 14, 2009 05:51 PM

I don't think any reform will rein in costs and growth unless a few things happen.

1. The public must re-learn the difference between "health care" and "health insurance." This distinction is intentionally blurred by all players, but it is fundamental. One can have lots of health care without insurance, and clearly, from some of the horror stories (of coverage denials, etc.), once can also have lots of health insurance but no health care, especially when it's needed most. But most people in the work force today have never known anything but today's employment-centric all you can eat "insurance" plans and I bet if you asked most people on the street, they would tell you they just assume that's the way it always has been. But just 30 years ago, when I first entered the work force (even as a trainee at one of the largest INSURANCE companies in the world), health insurance was not among the benefits I received.

2. Related to #1, as long as health care is associated in the public mind with something that should be "free" in the sense that it is either totally "insured" or totally provided by "government" there will never be any incentive or even a mechanism for individuals to make rational health CARE decisions. If someone else is paying - I want it all! Cat Scan! MRI! Elective Surgery! Gimme everything! Someone else will pay! No amount of clever regulation or heartfelt admonition will change that. If my child is critically ill - I am not going to assess the greater long term societal and economic impact of my demand for extreme meaures - my duty to my child is to squeeze the system for every ounce of care I can get. And that may be appropriate for truly life threatening situiations, but when the same logic trickles down to every cough sniffle and scrape, it's not hard to see why costs continue to escalate. So whatever the democrats, the republicans, Michael Moore, Barack Obama or Olympia Snowe may say, total insurance leads only to rationing - by government or by the insurance companies. Without a price mechanism - that is all there is - rationing by fiat. Funny thing is, the whole concept of "health insurance" for non-catastrophic medical care grew directly out of the government's price controls in WWII (another form of rationing). So we are trying to put out a fire by throwing more of the same gasoline on it that started it in the first place. It's not going to work.

Carol Cross

October 15, 2009 02:11 PM

I can't really disagree with Thomas Bowden's comments above. We have both lived a long time, apparently, and remember when health care insurance was not routinely provided by employers, etc.. and when health care was not so expensive.

Can we agree that times have changed and we are a different country than we were in WWII -- a better one, most would say! because of the GI Bill and Civil Rights and Women's rights, etc..

It is true, of course, that technology and modern medicine, to include miracle drugs, has made medical care more expensive and Americans are living longer than ever before (but maybe not for long because we are so fat)

Apparently, now, we are at a point where the majority of Americans believe that there is no "liberty and justice for all" unless medical care is available for all citizens of democratic Republics.

I agree that price mechanism is crucial and that health care costs, which have escalated at a greater rate than inflation in the other big sectors of the economy, somehow have to be contained.

I think you are right. There may be "rationing" but if this is the price of being our brother's and sister's keeper, a democratic as well as a Christian principle -- maybe this is the price we have to pay.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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