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Entrepreneurs’ Perspective on Healthcare Reform

on October 26, 2009 Source: Policy Dialogue on Entrepreneurship

PDE staff attended a U.S. Senate hearing entitled “Reform Done Right: Sensible Health Care Solutions for America’s Small Businesses" held by the Committee on Small Business & Entrepreneurship. Our report of the event follows:

On Oct. 20th, policymakers examined the impact of the current healthcare system on the nation’s small businesses and the potential consequences that reform may have on the future of U.S. entrepreneurship and economic growth. "Through today's hearing, our goal is to gain a better understanding of the needs of small businesses in health care reform and whether the current proposals meet those needs as we move further through this debate," said Senator Mary Landrieu, the chair of the Senate Committee on Small Businesses & Entrepreneurship.

In her opening statement, Sen. Landrieu (D-Louisiana) stated that annual healthcare costs for small businesses are estimated to rise from $156 billion today to $2.4 trillion in 2018. Sen. Olympia Snowe (R-Maine), who made headlines recently as the only Republican on the Senate Finance Committee to support the bill authored by Democratic Sen. Max Baucus, also underscored the imperative need for reform, emphasizing the key role of small businesses in the nation’s economic recovery and the “unsustainable” nature of current healthcare costs. She cited that only 48% of small businesses currently offer health insurance, and that this figure is expected to further decline if no reform is enacted.

Several proposed measures have specific implications for entrepreneurs. The establishment of a health insurance exchange for small businesses could resemble the Federal Employees Health Benefits Program (FEHBP), a private employer-sponsored healthcare exchange system that already provides affordable coverage to federal employees and their families. Karen Mills, the Administrator of the U.S. Small Businesses Administration, testified that such an exchange (provided that it has broad access) could help small businesses by pooling risk, decreasing administrative costs, promoting competition, and increasing access to better choices. Mills noted that small businesses currently pay up to 18% more for the same coverage purchased by larger corporations.

Mr. Gene Sperling, who serves as a Counselor to the Secretary at U.S. Department of Treasury, also spoke in support of creating a small business healthcare exchange and echoed the need for broad access (for example, allowing employers with up to 100 employees to participate) in order to achieve true reform. Sperling also commented positively on the proposed small business tax credit, scheduled to take effect in 2011 and 2012, and the need to retain an exemption for employers with less than 50 employees if an employer mandate were to be legislated.

Several panelists spoke out strongly against an employer mandate, arguing that it would lead to the loss of jobs. Karen Mills of the SBA stated that most small businesses do want to provide health insurance for their employees but cannot due to lack of access to affordable options. She argued that once accessible, affordable, and stable healthcare costs are achieved (for example, through an effective small business healthcare exchange), then employers would opt into the system.

Two members of the second panel -- Mr. John Arensmeyer, Founder and CEO of the Small Business Majority, and Ms. Amanda Austin, Director of Federal Public Policy at the National Federation of Independent Business, also raised the issue of tax-parity for the self employed. Currently, self-employed individuals cannot deduct healthcare costs from their taxes in the same way that employer-sponsored plans are tax-exempt.

Other panelists included Mr. Keith A. Ashmus, Chairman and Board Member of the National Small Business Association (NSBA), Mr. Edmund F. Haislmaier, Senior Research Fellow in Health Policy Studies at the Heritage Foundation, and Ms. Ann Sullivan, President of Madison Services Group/ Women Impacting Public Policy.

[Reported by Marianne Sierocinski]

Category:  Capitol Hill  Tags:  health care reform

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