Small Calif. firms say healthcare costs killing entrepreneurship

September 3rd, 2009, 6:00 am · 24 Comments · posted by Jan Norman, small-business columnist

Two-thirds of California small business owners say more people would become entrepreneurs if they knew they could get health insurance despite pre-existing health conditions, reports Small Business Majority, a national advocacy group focused on healthcare reform.

The statewide survey of 700 businesses (100 were owned by Latinos and 100 are in rural areas) is one of 15 polls the group has done in various locations nationwide. The subject is timely as Congress prepares to return to Washington D.C. and various healthcare proposals after Labor Day.

The Small Business Majority is the only group representing small employers to report that small businesses support federal mandates for employers to pay for employee healthcare coverage, according to the New York Times.

Surveys by three other small-business groups found small-business owners’ opposition to proposals to tax businesses that don’t have employee health insurance.

Overall, 45% of small businesses do provide coverage, and 86% of those that don’t say they can’t afford it, the Small Business Majority survey found. By comparison, a separate survey by management consultant Mercer said 67% of businesses with fewer than 500 employees provide health coverage, and 43% of those without coverage said they couldn’t afford it.

Other Small Business Majority findings:

62% of small businesses (66% of Latino businesses and 60% of rural businesses) believe their company has a responsibility to provide health coverage for its employees
68% of the state’s believe that to make healthcare more affordable, it’s important to share the responsibility among individuals, employers, insurance companies, providers and government
81% support the creation of a health insurance exchange from which small businesses could choose coverage from competing health plans

“Over the past decade we’ve seen our insurance costs increase 15% to 25% each year, and instead of the quality of our benefits getting better, it’s gotten worse,” said Liz Parker, owner of Tulsa Rib Company in Orange. “We need some type of reform that contains costs and offers small businesses some choice. Without it, very soon the only choice we’ll have is to forgo health insurance entirely.”

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BeyondTheMargin.net says:

September 3, 2009 at 6:49 am

While there is no doubt that the health care system in the US can be improved, institutionalizing health care through a single payer, government controlled system would expand the dependence of the masses on governmental organizations. Without competition, American consumers would lose all choice and would be completely dependent on the government to determine the extent of their health care coverage.

http://www.beyondthemargin.net/2008/06/institutional-dependence.html

Bryan says:

September 3, 2009 at 8:02 am

As opposed to being dependent upon for profit corporations like we are now!
Their priority is to fat CEO salaries and Wall Street. That’s who is controlling the extent of our health care coverage now, how is that better?

And right now the debate isn’t even about single payer, it’s about a public OPTION. The word OPTION means you can CHOOSE it or not. They say the insurance companies won’t be able to compete with a gov’t plan.

Well, if people like you prefer to pay 35% more than you should be paying and let corporations meddle in your health care, then people like you will continue to do so. Where’s the problem?

If you discover that your friends that chose the option are getting at least equal care for less moolah, you’ll probably decide it ain’t so bad after all and switch. That’s what the insurance companies are afraid of. That’s why they’re spending MILLIONS to ensure a public option is off the table.

This is not brain surgery….pun intended.

geodude says:

September 3, 2009 at 7:33 am

I am a small business owner in OC and began a consulting business 10 years ago. Back then, we were able to afford heath care coverage for every employee. Those who selected an HMO did not have to contribute toward the premium cost and those on a PPO made a small contribution. Since then, we have been hit with double-digit increases EVERY YEAR, out doing inflation by a 3 to 1 margin! Now our employees contribute heavily to the premium cost (50%) and have insurance programs with higher deductibles. At this rate, we will need to drop health insurance completely in a few years. Without a doubt, changes are required. However, I would like to see the focus on the root of the causes for unreasonable insurance costs such as malpractice costs, unnecessary medical procedures/testing, and medication costs. Letting the federal government take control is the last thing this country needs. I have no doubt that past government performance in similar matters (social security, medicare) will will be repeated in health care.

D. Woods says:

September 3, 2009 at 8:31 am

Geodude,

I’m trying to follow your logic here. You’re a small business owner and you have some concerns over a government run health option. Let me try to figure this out.

“Letting the federal government take control is the last thing this country needs.” – You mean it could become as bad as the USPS, which nearly every small business relies on for invoicing, bill payments, and business solicitation, at a fraction of the cost of “for – profit” mail services?

“I have no doubt that past government performance in similar matters (social security, medicare) will be repeated in health care.” – Do you mean that payments will be reliable, on delivered on time, and guaranteed?

Yeah, those would be terrible problems for us to have. You think we would be better off by getting our health services from a company that intends to always pay out as little as possible for treatments while charging as much as possible for the service? I fail to see the logic.

TimP says:

September 3, 2009 at 7:57 am

Geodude - I agree that the causes for the increased Health Costs should be looked at. I would guess that many of these costs are due to lawsuits and greedy attorneys looking to make a quick buck. In turn, a doctor must pay higher malpractice insurance rates, and those costs are passed on to the consumer.

This is no different than when a union demands more pay for their workers, and a company raises prices to pay for those increases. In the end, it is ultimately the consumer that pays for it.

I also agree that the last thing we need is more government control over health care. Your examples of social security and medicare are prime examples why the government should keep out.

D. Woods says:

September 3, 2009 at 8:42 am

Tim,

Perhaps the causes for increased health costs are as simple as the standard causes for any business to increase prices. PROFITS!

It’s a business just like ours. You charge the maximum the market will bare.

Look at what an insurance company is. They are a glorified bank. They provide no direct services (excludng Kaiser). They take money in - they put money out. They make a margin on the money they handle. But, they do it without the regulations of a bank… We’re all feeling the effects right now of an under regulated banking system. An entity that does not make profits a priority is the only way to provide these services at a lower cost.

The private insurance industry will survive the existance of a public health provider. Just as Fedex and UPS survive the presence of the USPS.
ChrisP says:

September 3, 2009 at 11:40 am

In the states that have placed limits on malpractice lawsuits, studies have shown the malpractice insurance rates are close to the other states who have no limits. RED HERRING brought up by those who hate the trial lawyers. Funny how no one ever asks for limits on what a business or individual can be sued for.

RevGreg says:

September 3, 2009 at 8:04 am

Trouble is that once the government gets involved in anything they never abandon a program as a failure. They just try to spend it into
working. Why? Because the very Beaurocrats that depend on the programs for their jobs say that spending more will fix it.

ocobserver says:

September 3, 2009 at 8:09 am

Many more businesses are declining to provide healthcare insurance for their workers. That’s rationing, folks. 46 million uninsured is rationing. Getting a notice from your insurance company that they refuse to cover a certain procedure or drug and you must pay for it out-of-pocket is rationing. With all the new expensive cancer drugs being developed that prolong life for 7 more day will cost $10000 a month. hah. And your insurance premiums will increase 30% so the terminally ill can get another week of life hooked up to IV’s in their hospital bed. hah. The absurdity has reach new heights. Yet the new drugs made in america will be available to europeans at a 70% discount since you are subsidizing them with your US dollars! hah! Common sense is gone. It’s checked out of the country.

45yrsinoc says:

September 3, 2009 at 8:12 am

I’m definitely leary of government-run health care, but there is a real need for some reform. The insurance companies are bleeding all of us dry while they pay the executives outrageous bonuses for the profits generated by denying needed treatment and rescinding policies that are “too expensive”.

So drop the public option and focus on countering the lobbyists and special interests that are perverting the legislative process to protect the status quo.

D. Woods says:

September 3, 2009 at 8:48 am

You’re “leary” of government run healthcare? Why? It’s been proven to work extreemly well all over the world. It costs less and is just as effective, if not more so as private care. People who have access to government supplied health programs give them an 80 percent or higher approval.

Our care is ranked at 37th in the world. Germany, France, England, Canada, all have higher rankings, better outcomes, and lower costs. What more evidence or other examples do you need?

ocballfan says:

As a small business owner in SOC, the Small Business Majority does not speak for me! This organization does not speak for the majority of us!!!!!!! NO NEW TAXES

D. Woods says:

September 3, 2009 at 8:49 am

Do you supply healthcare to your employees? Probably not!

jimmydee says:

September 3, 2009 at 8:24 am

Speaking of lobbyists…

How’s that “lobbyist-free” , “most ethical and transparent administration in history” going, Obama?

Bwaaaaaaaaaaaahhhhhhhhhhhhh!!!!!!!!

D. Woods says:

September 3, 2009 at 8:51 am

One thing for certain… The government doesn’t employ healthcare lobbyists. That would be one sector eliminated with single payer healthcare.
- ocobserver says:
  
  September 3, 2009 at 8:57 am
  
  Yep. You figured it out, Dwoods. Follow the money trail. Even the blue dog dems will sell their souls to the corporate lobbyists. All are well aware that government healthcare, like the Veterans Administration, has very high consumer ratings and treats patients at half the cost than the private sector with better medical outcomes. But those facts get in the way of a good storyline. You won’t even hear the media talk about it. Why? Because they sold out a long time ago too. Big money wins everytime.

wackytimes says:

September 3, 2009 at 8:49 am

According to the most objective research on the health-care and insurance industry, legal fees, malpractice judgements and settlements amount to less than 1.5% of insurers’ costs. That’s the cost to the industry; It’s a far less percentage in terms of a person’s premiums.

For those who keep harping about so-called greedy lawyers and claiming tort reform is needed, have no idea what they’re talking about.

justsayin says:

September 3, 2009 at 9:24 am

United Health Care, the largest insurer in the US has an annual profit of $80 Billion/year. Doctors fees are paid based on a database of what the costs of a service should be. The 2 companies in the country that all insurers used to determine costs, was purchased by UHC. Since taking over these 2 companies, payments to doctors and health providers for services have been reduced. Doctor’s cannot get more payment for an office visit or medical procedure than is determined by the insurer. Doctors are not the ones making money in our current systems. Why do we need a middleman to decide what procedure we should have?

UHC’s former chief had to give back $418 million in stock options and retirement benefits back because of back dating stocks. I don’t know how much he was left with, but I’m sure it was more than I and everyone I know will make in our lifetimes. This is the same guy who wrote the Medicare Part D prescription legislation which was an $80 billion dollar give away to the health insurance and big pharma companies. We could have recouped some of the costs by making these guys negotiate the costs of drugs, but that didn’t happen.

The CBO estimates that only 10 million people will choose the public option over the next 10 years. I for one am tired of giving my hard-earned cash to the people like Anthem Blue Cross and will gladly take the medicare-like public option, and pay for it.

D. Woods says:

September 3, 2009 at 9:38 am

Add me to that list.
- Bryan says:
  
  September 3, 2009 at 5:11 pm
  
  Me too.

Truth says:

September 3, 2009 at 10:02 am

Small business owners would greatly benefit from a public option similar to Medicare. Medicare has 3% administration costs while private insurance has 20% or more and that means the difference under private insurance is being picked up by employers and employees. Small business pays 18% more than large corporations for health insurance. Some large employers actually get kickbacks from big insurance companies by overcharging employees and giving back the rest to the large company to keep their business. If a public plan drives these kinds of people out of business - good. People shouldn’t exploit the sick for profit. We are the ONLY industrial country that allows for profit health insurance companies. That is dangerous because without health care you can die before you can make a insurance company provide service.

ChrisP says:

September 3, 2009 at 11:36 am

People-OPEN YOUR EYES! There are only 2 choices for healthcare. Only the government or for profit corporations are the players. The corporations are buying off the government representatives. Many big businesses like the status quo because they are self-insured and actually making a profit off their employees. Small businesses don’t want to pay any more taxes. Small businesses either don’t provide health insurance or provide mediocre coverage at high cost to the employee. Everybody is saying reform the other guy. People keep pointing out problems in other countries healthcare systems, but every statistic shows they have better health outcomes than we do. Despite their problems, no foreigner is clamoring for an American style healthcare system. Why can’t we as Americans come up with a system that uses the best of all systems-why is it harder than sending a man to the moon? If government is so incompetent and can’t do anything right-why are people so scared of a public option?

BS says:

September 3, 2009 at 3:44 pm

Ya, the Gov going to give us health care! Walk into a DMV and wait in line. Take Amtrack which is losing Hundreds of thousands of $ at our exspense. Look at the Postal service, losing millions, State Gov is a bunch of Liberals who have F’d this State and you people who think the Gov is going to reduce the cost and give “everyone” Health care. Bunch of idiots voted this douch-bag into office!

September 8, 2009 at 3:54 pm

Someone has used my name. Just so you all know, the justsayin that wrote the long message above is not the one who usually responds. Please try not to use the names others have chosen so as not to cause confusion. Thanks.

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