SHOP: Small Business Health Care Reform

We've said it before, we'll say it again: the currently dismal system of health-care coverage is a small business issue. It skews prices and
bizbox.slate.com
June 04, 2009 We've said it before, we'll say it again: the currently dismal system of health-care coverage is a small business issue. It skews prices and other things in a way that makes it easier for larger corporations to insure their employees, giving them a competitive advantage for attracting the best and the brightest; and it makes it extremely expensive for those small businesses that do offer coverage. Fortunately, important small business-minded legislators and groups--from both sides of the aisle--agree with us, and have decided it's time to help small businesses with their health care needs.

Three senators--Dick Durbin (D-Ill.), Blanche Lincoln (D-Ark.), and, of course, Olympia Snowe (R-Me.)--have recently introduced a set of proposals known collectively as the Small Business Health Options Program: SHOP.

Broadly speaking, SHOP would:

  • Allow pooling. It would permit small businesses (including the self-employed) to pool together, among different states. A bigger pool means the risk is more spread around, which translates to lower premiums (which is why, currently, big corporations have such an advantage!).
  • Extend tax credits. Small business owners who pay 60% of their employees' health insurance premiums would receive an annual tax credit of $1,000 per employee, or $2,000 per employee provided with family coverage. Bonus tax credits exist for employers who pay more than 60% of premiums.
  • Bars health status rating. Currently, when one employee at a small company gets sick, that event can raise everyone's premiums; SHOP would end that.
  • Credits for the self-employed. These folks would receive an $1800 annual tax credit ($3600 for family coverage) to buy insurance.
These are important senators supporing the bill. Snowe, as readers of this blog know, is probably the single most influential legislator when it comes to small business issues. Durbin is the Assistant Senate Majority Leader, and a close friend and ally of the guy who used to be the other Illinois senator. Lincoln is a representative of the politically crucial group of conservative-to-moderate Democrats.

But maybe even more remarkable is the diverse set of organizations that are backing this initiative. The Service Employees International Union--fast upstaging even the AFL-CIO on the labor front, and a hugely important (and progressive) advocate for health-care reform--is onboard. So are the National Partnership for Women & Families and Families USA. John Tozzi over at The New Entrepreneur got in touch with the head of liberal group Small Business Majority, and they support it too.

But also backing SHOP are conservative business interest groups, including the National Association of Realtors, the National Restaurant Association, and--wait for it--the National Federation of Independent Business, the most prominent small-business lobby, and one that nearly always finds itself aligned with the Republican Party. That's a big deal.

Actually, Small Business Majority has supported these initiatives for awhile, which should you give you some clue as to their political heritage. Yet here is NFIB President and CEO Dan Danner saying, “For so many small business owners the cost of healthcare is unsustainable,” and adding, "Enacting solutions specific to the diverse small business community is critical to advancing meaningful reform." The NFIB, which we have in the past criticized for toeing too close simply to the GOP party line, deserves a great deal of credit for demonstrating political flexibility here.

So this is all pretty politically huge, as well as a good thing, we think.

Caveats? Independent Street points out that SHOP is "just a band-aid where we really need some major surgery"--where we need major surgery being the sharply rising costs of health care. That's entirely accurate, of course: costs are the real issue (which both President Obama and the health care industry acknowledge).

SHOP by no means represents a panacea--certainly not for health care in America, and not even for the advantage in this realm enjoyed by big corporations over small ones. But when you have both the NFIB and the SEIU saying that this is a good and necessary first step, well, it's hard not to agree.


American Express OPEN brings you the latest insights from noted business authors and experts in our special promotion with Slate BizBox.