10/19/2007
CONTACT: Kevin Shivers, 717-232-8582 or 717-571-0009 (mobile)
or Jason Brewer, 202-406-4435
Independent study estimates more than 100,000 small-business jobs could be lost
HARRISBURG, Pa. -- Kevin Shivers, state director of Pennsylvania's leading small-business organization, the National Federation of Independent Business, and NFIB Research Foundation Fellow Bruce Phillips today unveiled a detailed non-partisan study of the proposed "Cover All Pennsylvanians" health-care plan. Phillips summarized the report for legislative and executive staffers this morning before publicly unveiling the study.
"Health-care costs and the ability to afford quality health insurance continues to be the most important issue for small business," Shivers said. "Small-business owners throughout Pennsylvania are looking for solutions that make health care both accessible and affordable."
But details of the study conducted by Phillips suggest that the mandates and payroll taxes contained in the Cover All Pennsylvanians plan would hit small-business owners hard.
"The 3 percent payroll tax on employers who presently cannot afford to provide health insurance to their employees would hit roughly 50 percent of all small employers in Pennsylvania," Phillips said. "That tax, along with insurance premiums and accounting costs, will cost small-business owners in Pennsylvania an estimated $1.9 billion annually."
The study also projected the impact those costs would have on the ability of employers throughout Pennsylvania to maintain payroll and grow their businesses. Phillips projected the plan would cost Pennsylvania businesses 167,000 jobs during the first five years of the program -- with a whopping 103,000 of those jobs lost coming from small employers.
"This proposal may be well-intentioned, but its effect on small business in Pennsylvania could be disastrous," Phillips said. "The loss of more than 100,000 jobs in the small-business sector of the economy could have a devastating effect on Pennsylvania's ability in the future to attract entrepreneurs and develop new industries."
Shivers was not surprised to learn the added costs could cripple many Pennsylvania employers, as many small job providers are already struggling.
"Small-business owners are already struggling with an increasingly competitive global economy and rising energy bills and other costs -- a whopping new payroll tax could put many of them out of business permanently," Shivers said.
Shivers also was concerned the proposal would do little to address the fundamental problem of affordability, but could exacerbate the problem by expanding the size and scope of state government with a payroll tax on those who can least afford it.
Cumberland county small-business owner Donna Partin said components of the plan would make running her small business more difficult, with new costs eating away at her ability to maintain her present workforce.
"As it stands today, this proposal is unfortunately all stick with very little carrot for struggling small-business owners like me," Partin said. "The troika of new mandates, taxes and government bureaucracy will be a job-killer."
Shivers suggested that rather than rather than focusing on building a larger role for state government in health care, legislators should focus on measures to expand consumer choices and improve quality of services at a lower cost.
"Many in Harrisburg have properly diagnosed the ailment, but are offering the wrong treatment for what's ailing Pennsylvania's health-care system," Shivers said. "Providing more options and greater flexibility for employers to provide health care to their employees ought to be our goal -- not creating a vast and costly bureaucracy that in many cases will do more harm than good for struggling small-business owners."
