Celebrate Small Business: First Do No Harm

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It’s official — the week of April 22-28 is National Small Business Week. However, its organizers and participants will be up against another compelling cause – “Cover the Uninsured Week.”

Click here to read President Bush’s National Small Business Week proclamation.

Indeed it’s ironic that these two cause-related weeks have at long-last collided. After all, many uninsured Americans own small businesses, work for a small business or have a family member employed by one. So, while the small business community will use this opportunity to advocate for straightforward solutions to provide entrepreneurs and their employees access to affordable coverage, it seems the “universal coverage” movement is on pace to drown out such calls for targeted (and far less costly) policy approaches.

Why? Quite simply, the “more government” coalition (as the common approach to the range of universal coverage proposals calls for increased government meddling) grows bigger by the day.

Not surprisingly, big business CEOs are attracted to the “universal coverage” discussion. It’s quite appealing, indeed, to be told that crushing health care costs will be reduced if government shifts or spreads some of these cost responsibilities around. But where are all the examples of government-directed initiatives operating with the same efficiency and productivity as the private sector?

Government doesn’t have the built-in incentives to operate efficiently and flexibly. That would certainly seem to be the case as it relates to something on the scale of managing our nation’s health care system.

That is why it’s so difficult to understand how some of America’s top CEOs are getting sucked into a government-driven solution. In the short run, costs may decrease, but over the long run – as experienced by other nations that have government-run or managed systems – costs rise, quality suffers and rationing occurs.

Whether you are a CEO who cares about the health and wellness of people, or the impact of rising costs on businesses and the economy, the experience of socialized medicine in most countries would seem to warrant scrutiny and skepticism by these business leaders.

Well, enough about big business and their CEOs — this is National Small Business Week.

First, let’s set the record straight. Small business owners are not against the goals of “universal coverage.” Already, the advocates of more government are working to depict the small business crowd as backward deadbeats when it comes to health policy. In a recent interview with a business magazine, a prominent Republican lobbyist (yep, a lot of them are on board too) said something to the effect of “gee, don’t those small business people want to be a part of the solution?”

Of course they do! However, the outcomes of enacted policies to date have not been worth cheering about as they relate to increasing “access” to health care. For the most part, exploding health insurance costs have been the result.

States, in particular, continue to increase the number of mandates on health providers and what must be covered in health insurance. There’s no end in sight for this mandate madness, according to the Council for Affordable Health Insurance (CAHI).

The group’s recent Mandates in the States 2007 report found more than 1,900 mandates, which increase the cost of basic health coverage “from a little less than 20 percent to more than 50 percent, depending upon the state.”

Small business owners and the self-employed are largely hit by these costs as large firms can self-insure under federal rules and escape many of these costly mandates. There’s some good news, however, according to CAHI. They report that some states “get it” and are allowing mandate-lite policies, which give people more choices over plans that best fit their personal and financial needs.

That model is worth thinking about at the federal level, and taking it nationwide. In fact, a bill in the last Congress introduced by Rep. John Shadegg, R-Ariz., in the House and Sen. Jim DeMint, R-S.C., in the Senate, would allow consumers to shop for their health insurance on a nationwide basis. This means consumers could escape their high-cost, mandate-laden states to purchase a policy that is more affordable and designed to meet their personal needs.

Both Democrats and Republicans in Congress have pledged to allow the states to experiment more with health care, so why can’t consumers do the same? Opening the system to a nationwide market would mean more choices, increased competition and lower insurance costs for small business owners and consumers.

If Congress is interested in helping the uninsured, it would immediately fix a disparity in the tax system that penalizes the self-employed. For the self-employed, the health insurance deduction is not considered an ordinary and necessary business expense, and that means their premiums are subject to the self-employment tax.

“To achieve tax equity between all forms of business entities, the self-employed must be able to exclude health insurance premiums from self-employment tax regardless of the entity form under which they choose to operate,” according to a position paper by the National Association for the Self-Employed.

A bill to fix this inequity had bipartisan support in the last Congress. Passing this simple legislation is a no-brainer, and should be on the top of the “to do” list for those who say they care about the plight of the uninsured and the nation’s small business owners.

Congress doesn’t have to fully rearrange the health care finance, delivery and insurance systems in order to cover more uninsured Americans. After all, of the 40 million plus who have no insurance, 17 million have good enough incomes to buy insurance but choose not to, and 25 percent of the uninsured are eligible for public insurance but refuse to enroll. Another 45 percent, according to the government, are temporarily without insurance for six months or less.

Congress can take small steps in helping the uninsured by implementing targeted and low-risk policy approaches – like those above, while including tax credits for individuals to purchase insurance.

So what’s the bottom-line message to Congress regarding health care policy – wait – all policy as it relates to small business and the economy? You guessed it: First, do no harm.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council, a research and advocacy group based in Washington, D.C. that works to protect small business and promote entrepreneurship. She is also founder of Women Entrepreneurs, Inc. , an association helping women business owners succeed through education, networking and advocacy. Kerrigan can be reached at kkerrigan@sbecouncil.org .