Saturday, December 12, 2009

Small Businesses

I want to start a small business. I'll start out with a few employees, and try to grow. How is my business affected by the various plans proposed for health insurance in America?

Status Quo (most states): Since I'm small, I don't have to give my employees an insurance plan. They pay for their insurance out of pocket, if at all. Some will likely not get insurance so they can spend their money on other things, like bigger houses. Those with insurance will overpay for their coverage because they can't negotiate, and will probably be underinsured. I may have to pay slightly higher salaries to make up for the lack of benefits in order to attract good workers, but since people generally don't understand the values of employer insurance packages, I won't have to pay much more. My costs are kept low, and I am better able to function as a small business. Republicans and Libertarians like this arrangement because it helps small business development and entrepreneurship, even though it exploits workers a bit and sets up people for hardship and bankruptcy if they develop health problems. Half of US bankruptcies, largely the cause of our economic collapse, are due to inability to pay medical bills.

Individual Mandate: My employees will be required by law to buy their own insurance. They are likely to buy catastrophic coverage with the lowest premium and least coverage. They will probably be underinsured. The minimum wage is the same, and my competition could consider ending employer-provided insurance, so I won't have to worry about paying much more in salaries, if any more at all, to make up for my employees' health insurance costs. Insurance companies love this arrangement because the government is forcing people to give these companies money, and the government will probably pitch in for people who need help paying. Free money for insurance companies, cheaper labor for businesses. Real Republicans and Libertarians don't like the government interference (most Rs are bought off by insurance lobbyists and have no values), and liberals don't like the poor quality of insurance and the burden on the working poor who may not qualify for enough subsidies.

Employer Mandate: This is my nightmare. The government would force me to pay for my employees' insurance. Since I have a small business, I don't have leverage to negotiate a good price. There are some small business collectives, though, that can negotiate together, depending on my state. I sure wish there was a national insurance market so the collectives could negotiate more freely. I have to deal with the local insurance monopoly. Combined with minimum wage laws and competition with larger businesses that can negotiate better, paying for health insurance plans for my employees may inhibit my small business's growth, or even make it unsustainable. My business may not last long, or even get started. It's a shame because consumers would really benefit from my business's existence, but not enough to justify paying the prices I would have to charge to stay in business if I have to pay for health plans. This plan also leaves unemployed people in the lurch, and when my business fails my employees will have nothing. Maybe my business can survive if I fire some people and work the others harder. Big businesses like the employer mandate because they already give their employees well-negotiated health plans, and this would make it harder for new competition to sprout up.

Public Plan: Ah, I could relax. Everyone has basic health coverage. They can buy fancier private plans if they want, but the basics are covered, and are better than the old private catastrophic plans. I am more likely to be able to pay competitive salaries or reinvest profits. My employees are secure. Real Liberals (not the bought-off ones), unions, health economists, and the poor favor this idea because it provides security and needed health care to all Americans, and improves the stability of our nation's economy while setting a stage that fosters small business innovation. Republicans and Libertarians hate the plan because it is government control (they blindly hold on to a belief and a value despite all the harm their decisions cause), and insurance companies hate it because they love the profits they get from our current horrible system.

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