Needs of Small Business Take Center Stage at Health Care Hearing

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On October 20, Sen. Mary Landrieu (D-LA), chair of the U.S. Senate Committee on Small Business and Entrepreneurship, and ranking member Sen. Olympia J. Snowe (R-ME), held a hearing, "Reform Done Right: Sensible Health Care Solutions for America's Small Businesses", to better understand the needs of small businesses regarding health care reform and to examine whether the current proposals meet those needs.

"There are 27 million small businesses in our country, accounting for more than half our workforce," Landrieu said. "These citizens who invest their time and money and assume the many risks associated with creating successful businesses deserve our best effort to reduce the slow growth of their income. They deserve a voice in this health care debate, and I have convened this hearing today to provide a forum for their voice to be heard."

At present, small business' health care costs are increasing faster than the prices of the products and services they sell, Landrieu noted. "If Congress fails to act now, health care costs are only expected to continue to rise. According to the Small Business Majority [SBM], the next decade promises that health care costs for small businesses will increase from $156 billion today to almost $2.4 trillion by 2018."

Due to high health insurance costs, small businesses, "most of which want to provide coverage," said Landrieu, are faced with the choice of cutting wages or cutting health insurance -- and health insurance is usually the first to go. "Many of us here in Washington, including myself, ranking member Snowe, and President Obama, have said that the quality, affordable health care choices we have access to through the Federal Employees Health Benefits Program (FEHBP) should be available to all Americans."

Karen Mills, head of the U.S. Small Business Administration, noted, "For decades, surveys of small businesses have shown that the number one concern of small businesses is ... access to affordable health care. Since 1986, the [National Federation of Independent Business] survey has ranked health care costs number one on top of the list of 75 issues facing small businesses. Thanks to the hard work of this committee and many in Congress, we are closer than ever to putting reforms in place that have the potential to benefit millions of entrepreneurs, small business owners, and their employees." And, she stressed, "The status quo is not an option."

John Arensmeyer, founder and CEO of the Small Business Majority, told the committee that over the past several months, his organization "has polled small business owners in 17 states and they have consistently supported health care reform as a vital step toward a reinvigorated economy.... Without reform, premiums will continue to rise, taking a huge toll on the profits of small business and the jobs they provide." He added, "If we don't get control of this crisis facing small business, we will impede our nation's economic growth. Comprehensive health care reform is essential to our vitality as a nation."

The areas that Congress should focus on, said Arensmeyer, include ways to mitigate health care costs for the 22 million self-employed entrepreneurs. All the current plans in Congress will require self-employed entrepreneurs to buy health insurance and may require those that already have insurance to purchase health insurance at an additional cost. "The tax code doesn't allow them to deduct the cost of health insurance for income and self-employment tax," he explained.

Arensmeyer stressed it is "essential to have an insurance exchange that is well designed and robust" and that offers healthy competition with as "large a pool as possible" to drive competition. "And finally, cost containment provisions in the merged bills should be maximized to ensure that not only government health care spending, but also costs for individuals and employers are reduced."

Amanda Austin, director of federal public policy for the National Federation of Independent Business (NFIB), cited escalating costs, a "severe lack" of competition, and a "serious lack of choice" as key reasons why health care has remained a key priority for its 350,000-plus members. Austin said the ultimate goal of reform is lower costs and increased access to health insurance for small business owners.

To achieve these goals, she noted that NFIB is in favor of a health insurance exchange; allowing for the purchase of health insurance across state lines; tax parity for the self-employed; tax credits for small business; and administrative simplification to lessen the burden on small business owners.

Among the areas of concern, NFIB is opposed to a public option, and believes that an employee mandate would hurt the "fragile" economy especially for small business, and would destroy jobs and "fail to increase choice and competition." Austin stated, "The overall cost of the health care bill continues to be a concern for small business owners. In a time of economic uncertainty, small business has a heightened level of anxiety regarding the current deficit, as well as resistance to new spending. They are deeply concerned that this spending would result in higher taxes on them."

Others testifying at the October hearing were Gene Sperling, counselor to the secretary, U.S. Department of Treasury; Keith A. Ashmus, chairman and board member, National Small Business Association; Edmund F. Haislmaier, senior research fellow in Health Policy Studies, the Heritage Foundation; and Ann Sullivan, president, Madison Services Group/Women Impacting Public Policy. --David Grogan