WASHINGTON (TheStreet) -- Is health care reform destined to be a boon or a bust for small businesses? That's the billion-dollar question.
President Barack Obama has been trying to build public support for the government's plan to provide health insurance to all Americans for weeks, taking a break from his town-hall meetings to hold a televised news conference last week. Small-business owners, a key constituency, remain divided in the reform debate.
On July 25, the White House stepped up its efforts to court small-business owners by issuing a report that says these firms pay 18% more for their employees' health insurance than large companies. According to the report, 49% of firms with 3 to 9 workers and 78% with 10 to 24 workers offered health insurance to their employees last year. In contrast, 99% of firms with more than 200 workers offered health insurance.
The National Federation of Independent Business, a lobbying organization for small businesses, has been critical of the government's plan. The organization recently circulated a petition that says the House's plan would hurt profits at a time when firms are struggling to find capital. The group says the plan "threatens the viability of our nation's job creators" and "fails to address the core challenge facing small businesses -- cost."The Small Business Majority (SBM), a group formed specifically to lobby for health care reform, offers a more optimistic view.
"For too long there's been this feeling that if you're pro-business, you're against health reform," says John Arensmeyer, its chief executive officer. "Regardless of their political views, all small business owners want lower health care costs, so they can grow their businesses and offer insurance that enables them to attract and retain good employees."
An SBM analysis, conducted by Massachusetts Institute of Technology economist Jonathan Gruber, used a simulation model to gauge the impact of health care reform on businesses with 100 or fewer employees. The study says that, without reform, small businesses will pay nearly $2.4 trillion dollars over the next 10 years in health care costs for workers.