Small businesses have spoken out vociferously against the health care reform plan being considered by Congress — and they’re throwing their support behind an alternative proposal — the Shop Act.
The current legislation calls for employer mandated health insurance, a value-added tax and public programs that would compete with private insurers — each of which the National Retail Federation and the National Federation of Independent Business oppose.
“We are a labor-heavy industry that operates on a thin profit margin,” said Steve Pfister, the NRF’s senior vice president for government relations. “We cannot afford any new labor costs. Consumer spending represents more than two-thirds of the gross domestic product, but has plummeted dramatically over the past two years. Placing an additional tax on consumer spending would further depress spending, and both lengthen and deepen the current recession.”
The Shop Act would allow businesses nationwide to pool their resources and buy small group coverage — substantially reducing the cost. The act also would provide tax credits for small business that offset contributions to employee premiums and ban the health status ratings that increase premiums when an employee becomes ill.
“It opens the door for competition,” said Tony Gagliardi, Colorado director for the National Federation of Independent Businesses. “It doesn’t pit private insurance companies against the federal government.”
He said the government doesn’t need to reinvent the entire health care system.
“But we do need a way to make it easier to buy insurance,” Gagliardi said. “In Colorado, we simply aren’t big enough to spread the risk enough — and our only option is a very narrow state small group plan. Those premiums are 18 to 20 percent higher than the large group plans.”
The timing of the current health care debate couldn’t be worse, said Tom Zwirlein, professor of finance at the University of Colorado at Colorado Springs.
“Most small businesses are mom-and-pop stores that offer minimum wage,” he said. “If the cost of business goes up, and there’s no room to raise prices, their option is to lay people off. For small businesses, reform is just the government forcing them to do one more thing.”
As businesses struggle to remain open during a recession, adding to their costs might be the one thing that forces them to close.
“Businesses are retrenching, cutting costs, trying to survive,” Zwirlein said. “This is going to be substantial costs that business models aren’t able to absorb. And it seems that we are adding to the deficit, day by day, minute by minute. It’s unsustainable.”
Zwirlein said he’s also concerned about the apparent rush to enact the legislation.
“This is a very expensive plan that they want to pass very quickly,” he said. “When I talk to small businesses — first, I see them growing, adding employees. After a few years, they’ve cut back. And the reason is — federal government rules and regulations force them to get rid of employees and operate on their own. That’s a concern.”
However, Zwirlein said there’s a solution to the health care problem which could be simpler than any legislation that is being considered — wellness.
“I think they are trying to reinvent the entire system, when we need to examine why costs are going so high,” he said. “We might find out that one of the reasons is, that as a nation, we’re not very healthy. Maybe if we worried about wellness more, we could reduce overall cost of care.”