Small Businesses: Friends or Foes to Reform?

Sun Tzu says that battles are won or lost before the general even takes the field.  He also says that knowing yourself and knowing your enemy will lead to victory in a hundred battles.  But aside from some obvious suspects, it’s hard to know who the enemies of reform are this time – and no one is as much of a wild cared as small businesses.

Some moneyed interests obviously stand to lose big if we achieve universal health care – insurance companies, pharmaceutical companies, manufacturers of health care technology, possibly the Republican Party.  But throughout the history of reform efforts, they’ve always needed an additional partner to make their case credible to the public.  In the 1930s and 1940s, it was the physician societies whose members were concerned that their fees would be severely curtailed.  By the 1970s and 1990s, more and more physicians spoke out on the need for reform, and a new ally took center stage.  The business community in general and small businesses in particular helped sink the Clinton reform effort through their rejection of the “employer mandate” which required every business to buy benefits or pay into a common fund.  During the campaign of 1992, they had embraced the Clinton vision of universal coverage and cost containment.  But when asked to put skin in the game, their fears about competitiveness trumped their altruism.

But this year is different. As we’ve discussed, the costs are so unsustainable, particularly in such a bad economy, that the tide may have turned.  Small business feel their competitiveness is in question no matter what happens – and the status quo is unsustainable for them.  Offer benefits and you’re beat in profits by those who don’t.  Don’t offer benefits and you lose the best employees to those who do.

A new survey by The Mainstreet Alliance of 1,200 small business owners nationwide confirms the NY-specific poll by BALCONY and the Small Business Majority from this summer.  Small employers say they’re ready to have skin in the game, with 73% of those surveyed saying that they’re willing to contribute to provide quality, affordable insurance for their employees.  63% are willing to pay 4-7% of their payroll to do so – the same price point that provoked such outrage in the Clinton years.  It’s now palatable because many small businesses are already paying 11% of payroll on health insurance due to a decade and a half of dramatic cost increases.

Even more intriguing, 59% of respondents say they’d prefer to see a public competitor to private insurance -- the favored solution of President-elect Obama, Sen. Max Baucus of the Finance Committee and (as rumored) Sen. Ted Kennedy of the Health, Education, Labor and Pensions Committee – to a solution that would merely increase the private market options.  That’s good news for the prospects for real reform, not just weak incrementalism.

There's some poetic justice that the insurance industry, whose practices put small businesses in such a bind, have therefore lost an ally in their attempt to forestall a competitor of their own -- publicly funded and as efficient as Medicare.  Mainstreet Alliance was fairly glowing in their assessment – “Move over, conventional wisdom, because small business is ready to ante up to make real health care reform happen in 2009.”  Let’s hope those of us pushing for health care reform can count on them as an ally.

(Photo credit:  ImaginaryGirl on Flickr.)