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HUMAN RESOURCES

SBA Makes the Business Case for Health Care Reform

An SBA study asserts that small businesses pay more for health care coverage and are more likely to lose their coverage than large businesses.
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When it comes to health care, what's wrong with the status quo? According to a recent report by the Small Business Administration, the status quo isn't working for small businesses. The report, released on October 20 by SBA Administrator Karen Mills and Health and Human Services Secretary Kathleen Sebelius, found that on average, small businesses pay up to 18 percent more than big businesses for the same insurance policies. Additionally, employees of small businesses are 50 percent more likely to lose coverage than workers at large businesses. The SBA is using the study's findings to bolster support in the business community for health care reform.

Small businesses are "the engine of economic job growth in this country," says Jonathan Swain, an assistant administrator at the SBA. And making sure small businesses have access to affordable health care is, he says, "not only important for the employees and the families of the folks who work in small businesses, it's also vital to our economic recovery."

Nevertheless, small businesses are charged more than large businesses for the same coverage because large corporations can spread risk across a large pool of employees, the SBA report finds. One proposal before Congress would allow small businesses to buy insurance through exchanges populated by a number of employers, in order to gain leverage and economies of scale with insurance providers.

Besides lowering costs, Swain thinks reform could bring about decreased "job lock," meaning that workers will be less hesitant to change jobs or to start their own ventures for fear of being uninsured. Reform could also allow small businesses to better compete for talented employees by making healthcare coverage more affordable and by making costs predictable and easier to budget.

Though many small business advocates agree that the current health care system is flawed, not everyone thinks government reform is the solution. One vocal opponent of such a fix is Rick Scott, the founder of Conservatives for Patients' Rights. Scott sees things that could be improved about the health care system but thinks the government would bungle the job, turning America's healthcare system into a more life-threatening version of the DMV. "If the government could run a program as efficiently and with the same compassion as the private sector can, then it sounds good," Scott says.

Proponents of reform claim that groups like Conservatives for Patients' Rights mistakenly inform the public that the government is trying to take over health care, rather than trying to expand coverage. "We've seen insurance companies and also folks who want to score cheap political points run a fear-based campaign against health care reform," says Joshua Welter, the coordinator for the Washington Small Business for Secure Health Care Coalition.

At the SBA, the goal is to drum up support for President Obama's healthcare agenda. Says Swain: "All the proposals circulating on Capitol Hill would have benefits for small businesses over the current system."

Last updated: Nov 2, 2009




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