Business for Shared Prosperity

By John Arensmeyer
Sacramento Bee, January 25, 2008

There are only two kinds of small businesses that don't offer health coverage to their employees: those that want to but can't afford it, and those that don't want to.

There are exceedingly few that fall into the latter category, but their voices are heard disproportionately in the health care debate, and as Assembly Bill X1 1 heads to a critical series of votes in the Senate, it's important for our leaders to understand this.

Those who hold themselves out as representing small businesses but fight against a practical solution that would benefit small businesses aren't actually representing their purported constituents very well.

Overwhelmingly, small businesspeople have their employees' interests at heart and view providing health care as part of their obligation to their staff. In fact, according to a random sample of California businesses we recently surveyed, 80 percent felt this way.

The obstacle is affordability – and a health care market that severely distorts and limits the rest of our market economy.

California's 3.3 million small business owners, who employ more than 50 percent of the private sector work force, currently don't have an affordable option. We are fed up with the ever-rising price of health coverage, and in many cases are being completely frozen out of the market for affordable health care. Health insurance costs for small businesses in California rose 87 percent between 2000 and 2006, with only 39 percent of workers at businesses with less than 100 employees even covered by their company's health insurance plan.

Our growing health care crisis severely impedes California's economic progress and hampers the pursuit of the American dream by its citizens. The success or failure of a business venture should depend upon innovation, product quality and hard work – not the cost of providing, or not providing, health insurance. Our health care crisis has created an external barrier to free and fair competition that impedes our economic prosperity.

California's entrepreneurs want bold action now; they believe that government must play a key role in the process; and they are more than ready to be part of the solution.

In August 2007, we conducted a groundbreaking scientific poll of 500 randomly selected California small-business owners (www.smallbusinessforhealthcare.org). The survey, which had a margin of error of plus or minus four percentage points, found that small businesses across California overwhelmingly want to ensure that their employees have health coverage. They believe, by a 3-1 ratio, that health care financing is a shared responsibility among individuals, businesses and government; and a substantial plurality supports the very health care reform plans from which the Assembly bill was derived.

And that's no wonder: AB X1 1 offers a real bargain to small businesses and shelters them from the vagaries of a dysfunctional and deteriorating health care insurance market.

Under AB X1 1, businesses have a choice between offering their employees a health plan through the traditional market or through a new statewide pool. The latter, using bargaining power three to four times greater than PERS, offers an incredible value: Employers contribute between 1 percent and 6.5 percent of payroll to a health care pool, from which their employees would receive comprehensive coverage. This represents a massive savings over the current 11.2 percent of payroll paid by the average small business.

California's 2.3 million sole proprietors and independent contractors are currently stuck in the horror of the individual insurance market, with its dreaded "pre-existing condition" barrier. AB X1 1 solves a huge problem for them and for would-be entrepreneurs with health conditions by requiring that insurance companies offer insurance without regard to health status. This removes a significant impediment to starting and running small businesses.

Most business owners are pragmatic, not dogmatic. We want to do the right thing by our workers for both practical and personal reasons. AB X1 1 gives small businesses a chance to do that.