As every small business owner worth their bottom line has long known, the ability to offer a comprehensive benefits package is key to both attracting and retaining the best employees. But in the past few years alone, the rising cost of health insurance has left many entrepreneurs contemplating cutting health benefits or at a minimum, cutting back on their contributions, and they are anxious for Congress and the White House to enact meaningful reform.
According to the National Small Business Association (NSBA), premiums have increased by 119% since 2001, outpacing the rate of inflation, which has increased by 29% during that period. A Kaiser Family Foundation study has found that between 2000 and 2007, the percentage of small businesses offering health insurance dropped from 68% to 59%.
For months, insurers, pharmaceutical companies, and hospitals have been working behind the scenes, making deals with the Obama administration to signal that theyâ€™ve accepted the inevitability of healthcare reform and are finally ready to get on board. Small business owners and their advocates finally had their say on the issue last week at White House and Capitol Hill roundtables, while lawmakers in both chambers of Congress engaged in deep debate over how best to solve the problem of providing coverage to all.
â€śEveryone in Washington is talking about healthcare and rightly so, â€ś said Vice President Joe Biden at the White Houseâ€™s Middle Class Task Force roundtable on the rising costs of healthcare. â€śItâ€™s perhaps the foremost economicâ€”and moral issueâ€”that this administration is determined to do. But not everyone is talking about you all and Iâ€™m here to tell you that small business employees and employers are not a small concern to us.â€ť
Anthony Harris, president of American Capital Contractors, attended the White House roundtable and recounted an experience that encompasses every small business ownerâ€™s nightmare.Â Currently, Harris pays 100% of the insurance premiums for 63 employees, an expense almost equal to his payroll. His insurer recently covered 80% of the expenses for one employeeâ€™s cancer surgery, but the remaining costs forced the woman to declare bankruptcy. Further, the companyâ€™s premium rate will soon increase based on this one employeeâ€™s illness.
â€śWe havenâ€™t always been able to afford insurance and Iâ€™m not sure how much longer weâ€™ll be able to,â€ť said Harris, who plans to require employees to contribute.
Although House Democratic leaders and the Obama administration are committed to offering a public option, entrepreneurs and advocates are divided. The NSBA, for example, says that a public insurance option could do more to undermine than enhance market reforms.