09/ 26/ 2007
by NFIB President Todd Stottlemyer
You've probably heard a saying that goes something like this: When California sneezes, the rest of the country catches the flu.
The metaphor describes how the Golden State frequently sets trends that sweep across America. Sometimes the trends are harmless, even fun, such as skateboarding or rollerblading. Other times, the standards set by California are ultimately beneficial, such as those that have led to lower vehicle emissions and cleaner air.
But there's a health-care proposal in the California Senate that has the potential to jump-start a national trend. A bill intended to reduce the number of uninsured working-age Californians and their dependents would do so by requiring employers, including all small businesses, to spend at least 7.5 percent of their payroll on health insurance.
Employers who spend less will pay the state the difference between 7.5 percent and what they currently spend. Those who don't offer any health insurance would be required to pay a 7.5 percent payroll tax. The money would help pay for private insurance plans for those who can't obtain health insurance through an employer or who fall below a certain income level.
Could this idea become trendy as well? Already, Wisconsin raised the bar with a plan that, if passed, would impose a stunning 14.5 percent tax on employees and businesses, on top of their federal and state taxes.
A plan to require health-insurance coverage for all may appear to be a good idea on the surface. And, in fact, most businesses recognize that they need to contribute to solving our health-care crisis and understand that a good benefit plan helps attract and keep talented employees. But why should employers, including the smallest of businesses, be forced by the government to shoulder this burden entirely?
The California proposal doesn't recognize that some business models simply can't afford these additional costs. Nor does it make any distinction between a business with one employee and a corporation with 50,000 workers. In addition, the economic consequences would be devastating.
A recent study by our Research Foundation shows that the California plan would cost employers an additional $8.3 billion in taxes and administrative and other costs. Businesses would lose approximately $67 billion in sales, and the plan would lead to 249,000 lost jobs within five years of the proposal becoming law.
If we truly want to provide coverage for everyone while protecting our economy, the real focus should be on what you've told us is your biggest concern—the cost of health insurance. Reduce costs, and we can increase coverage. We also need a national solution, not piecemeal, state-by-state attempts.
Through the Member Ballot and other research, you've told us that the broad principles of the solution should include:
- Increasing competition by breaking down the barriers that exist to selling insurance to small businesses across state lines.
- Opening markets to provide a wide variety of choices of insurers and coverage plans.
- Providing complete transparency in the costs of treatments and the outcomes of those treatments so that we become better-educated consumers of health care and can make more informed decisions.
- Making health insurance portable from job to job, which would encourage more would-be entrepreneurs to follow their dreams and start a business without worrying about losing coverage.
In the last two issues, you've read about two different approaches to the problem from Sen. Ron Wyden and Sen. Tom Coburn. There are other ideas floating around Washington, D.C. In the near future, we'll be conducting research to learn more about the specific things you would choose in a comprehensive health-care solution. As always, your opinions will shape our position on this critical issue, and I look forward to seeing the results.
P.S. In this issue of MyBusiness, we begin a regular section devoted to health-care issues and action called “Health-Care Corner.” See page 26 for this informative new feature.
