Henry Sanders, a Madison-area small business owner and Democratic candidate for Lieutenant Governor, shares his thoughts on why the health care reform legislation passed by Democrats and signed into law by President Obama is good news for small businesses:
Health care reform is good for small business– and good for job growth in Wisconsin
By Henry Sanders, Jr.
I’ve learned a lot over the last fifteen years, but one thing stands out more than most: what’s good for small business is good for Wisconsin because it’s good for job growth.
And the new health care package is good for small business. Period.
The health care reforms signed into law this week do a lot of things: the package reins in out-of-control costs, protects people from losing health care coverage when they need it most, and offers access to people who couldn’t afford coverage before. Most of the people who don’t have health insurance in this country are small business owners, their workers, and their families. So there’s no doubt in my mind this health care reform package is a small business relief package.
Consider this: More than three-quarters of businesses in Wisconsin are what we consider small businesses. Yet only 38% of those – meaning less than 30% of all businesses in Wisconsin – could afford to provide health insurance for their employees. That is, until now.
I’m a small business guy. I own a small business that helps other small businesses connect with capital to retain and create local jobs. I’ve also started two non-profit organizations to support entrepreneurs, small businesses, and their employees. So I deal on a daily basis with small businesses. I know their challenges inside and out. Ask any small business owner, what’s your most difficult expense? What’s the one thing that could put you under? The answer is consistent: It’s not regulation. It’s not taxes. It’s health care costs.
It’s hard to survive when one of your biggest expenses more than doubles every ten years. It’s hard to recruit top talent when you can’t offer health care as a benefit. It’s hard to take care of your people when one of them gets sick and everyone else’s premiums go up. It’s hard to compete with big corporations when your employees’ premiums are 18% higher than theirs.
And I can’t tell you how many times I’ve heard, “I have a great idea for a new business, but I can’t leave my corporate job because I need the health insurance.” Would-be entrepreneurs — would-be job creators — are stuck in their current jobs not because they need the salary, not because they’re afraid to take a chance, but because they can’t afford their own health insurance.
Simply put, by making health insurance affordable for small businesses, President Obama and Democratic leaders are allowing more people to start small businesses, and encourage small businesses to grow and create jobs. They’re providing fuel for the engine that drives our economy.
Several provisions in the bill are aimed directly at small businesses. For example, tax credits — beginning immediately — will cover up to 35% of health insurance premiums for the smallest businesses, making coverage for their employees more affordable. Other credits will cover as much as 50% of premiums in four years. And beginning in 2014, state-based health insurance exchanges will give small businesses competitive advantages normally reserved for big corporations.
Even the reforms not directly aimed at small businesses will help small businesses. For example, when a business is able to provide health care for only 10 or 20 employees, it’s easy for the insurance company to jack up premiums as soon as one or two of those employees gets hurt or sick. The new reforms solve that problem.
And then there are the intangibles. A healthy workforce is a more productive workforce. Workers with access to quality, affordable health care are less likely to leave for a corporate job and less likely to need time off.
Here’s the bottom line: health care and small business are both in crisis, and there’s still work to do to get the economy back on track. But this week, President Obama and one party in Congress — the Democrats — went a long way toward solving both at once. And as a small business guy, I’d like to say, “Thanks.”
Henry Sanders, Jr. is a Waunakee small business owner and Democratic candidate for Lieutenant Governor. Read more about Sanders’ job creation and economic development experience at www.henrysanders.org.
I think most anyone will acknowledge that what’s good for our nation’s small businesses is good for our nation’s economy, and tax credits for small businesses to make providing health care to employees more affordable is certainly a good thing.
“It’s hard to survive when one of your biggest expenses more than doubles every ten years. It’s hard to recruit top talent when you can’t offer health care as a benefit. It’s hard to take care of your people when one of them gets sick and everyone else’s premiums go up. It’s hard to compete with big corporations when your employees’ premiums are 18% higher than theirs.”
This brings up a point that I have made in conversations with colleagues. How many people would leave those Corporate Cubicles and work for small businesses if health insurance was not holding them to the job?
We might see a migration of talent from large “nobody cares about you” companies to small and midsize companies where your contribution is more visible and appreciated.
PB, that’s an excellent point, and I’ve always maintained if folks had access to affordable health insurance, you’d likely see more folks moving around in their jobs or taking a chance on being an entrepreneur.
Partially, I agree with you 100%. Business Week has labeled this phenomena “job lock” where people stay in jobs simply to keep their health care benefits. Not only should we see more people willing to go to small and mid-size companies, but there also should be more entrepreneurial activity as people become willing to take greater risks knowing that they are insurable without the risk of denial for pre-existing conditions or eventually without excessive rates based on their health condition. For this reason alone, business and economic development groups should be jumping up and down about health care reform. For more on this see http://www.businessweek.com/smallbiz/running_small_business/archives/2010/03/health_reform_e.html
I just got around to reading that article a little more carefully… Does health insurance the way it currently is discourage people from leaving their jobs or starting up their own business? Absolutely. With the caveat that having done it myself, if you aren’t willing to take the leap because of it, you are very unlikely to be committed enough to make a go of it anyway. But again, starting your own business, you are not required to provide coverage – and you would not voluntarily take on the additional expense.
The article also makes the argument that:
That’s nothing remotely close to evidence. There’s are some very good reasons why retired folks become self-employed that have nothing to do with health insurance or Medicare. Collecting a pension, social security or other retirement income, self-employed is a bit of a misnomer. They’re retired – and looking to keep busy and maybe make a couple of bucks on a hobby.
And again, what does this legislation do to address portability? Nothing. Insurance is as tied to employment as ever – unfortunately as this was one of problems that was universally recognized and a solution would have been universally supported.
Well this is going to be a boon to small businesses in one regard. Since as far as I can tell, it doesn’t apply to those under 50 employees. I’d hate to be employee #51 though. Seems quite clear that companies that have say 55 employees – there’s going to be 5 or 6 let go because they can’t afford the financial and legislative headaches. There’s going to be a record number of companies of exactly 49 employees – there will be an artificial cap. Of course at some point, I’m sure the “loophole” will be closed.
Oh and health insurance portability – this is one of the issues there’s universal support for. It should have been addressed on it’s own, with targeted legislation to do just that – to separate health insurance coverage from employment. This reform bill doesn’t directly address that problem at all – it just declares is solved in some roundabout, “trust us” manner.
Yes, very perceptive of you. I missed that point and assumed that one can carry one’s ‘old’ insurance to a new job with your new employer picking up the tab equal to the cost of his offered insurance.
But it may be that only the public option would have allowed transportablity. Does anyone know?
The portability is that you are insurable, not that you carry your old insurance to a new job. The best separation of health insurance from employment would be to have a national health insurance system without all of the infrastructure and administrative costs associated with multiple insurance carriers, multiple insurance laws, multiple insurance forms, multiple insurance executive staffs etc. One of my friends does hospital consulting and was doing work at a small rural Wisconsin hospital and asked why they needed so much room for their billing department, only to be told it was because of the 1,500 plus different policies that they had to track based on employers & insurance company variations.
I absolutely agree. In most cases, I consider myself an almost extinct breed, a federalist. But I think it’s absolutely idiotic to have separate state insurance agencies. I’ve worked in the financial services industry for almost 15 years. Financial products are regulated by a a self regulating body – FINRA (formerly NASD) with the government SEC behind them to swing the big stick. Not perfect, but honestly it works about as well as you can hope for. Insurance products being regulated by 50 different state commissioners offices is a jumbled mess.
I would fully support legislation to nationalize (for lack of a better word) insurance. Create an industry regulatory body on par with FINRA and break down the state barriers so there’s real competition. With competition and many options, separating coverage from employment becomes much easier.
And a targeted bill to do this would be 1000% more transparent. It would be much easier for people to read – much much more difficult to stuff with unrelated garbage & bribery. Very little to be controversial or partisan about it.
Of course such an approach has the fatal flaw of not furthering political & financial agendas.
“Of course such an approach has the fatal flaw of not furthering political & financial agendas.”
Ahhh, I might add that it does not increase donors to the party or to the candidates either.
The concept is doomed to extinction in any committee.