Q: Steve: What do you think of this health care reform bill? I think it stinks.
A: I agree it stinks, but do you know what stinks worse? What we have right now.
Of course watching this bill wind its way towards law has been an unappealing sight, and yes, it was full of pork and kickbacks that verged on obscene. But then again, our system was designed for gridlock, give and take, checks and balances, and all that. But no one said it was pretty.
So this is the bill we have. Is it good for small business? On the whole, I say yes. As I say, it beats the alternative, the status quo, and that is what this come downs to – a crappy bill with some good stuff, or nothing.
For the small business owner, one of the best things about this bill is that it will insure an additional 30 million people. While it is good and proper for a country like ours to do so, it is also good business, and here is why: While you may think that the uninsured are the needy, the young, and the impoverished, the fact is, many of those uninsured work for small business.
Why are they uninsured? You know why: It costs the average small business owner too much to insure them.
Consider these sobering statistics:
- Only 49% of businesses with 3 to 9 employees (the vast majority of all small businesses) offered any type of health insurance to their employees in 2008, down from 58% less than a decade ago
- 29% of employees at businesses with 25 employees or less were uninsured altogether in 2007, and the number is certainly higher today
So for starters, that small businesses may be able to get more affordable health care insurance is no small thing, indeed, it is a big thing. The main reason that health insurance is so expensive for small business is that there is a very narrow pool of people being insured. Bigger companies with more employees are better able to spread the risk around so premiums are lower, and they also have more buying power due to their size.
To counter this, starting in 2014, small businesses and the self-employed will be able to shop for plans offered through new state-based purchasing pools called exchanges. By pooling small businesses together, these purchasing cooperatives are expected to offer rates that should be lower because 1) of increased group purchasing power, and 2) bigger pools.
What about these mandates to buy insurance?
For the most part these will have little effect on small business. Businesses with fewer than 50 employees will be exempt from the mandate to buy employees insurance, though it is expected than many companies will nevertheless try to offer it for two reasons:
- The exchanges should create a more affordable option than available now, and
- The plethora of new tax breaks and credits written into the law as incentives
Another expected benefit of the bill for business is that employees will likely be more willing to change jobs and join smaller firms because, either, there will be coverage at the new firm via the cooperatives, or the employee him or herself will be able to get affordable coverage through the exchanges. The so-called “job lock” – where employees fear leaving a job so as to not lose their insurance – should hopefully be a thing of the past.
Will the bill keep costs down? Of course it is debatable, but what is not debatable is that the status quo had become untenable. Something had to give. Hopefully this bill will deliver the changes small business owners so desperately need.
And yet . . . they say that if you are squeamish, it is best not to watch sausage or legislation being made. Me thinks that this process has given sausage making a bad name.
Today’s Tip: What do buyers look for when looking to purchase a business and what should entrepreneurs be doing if they want to eventually sell their enterprise? If you want to know, I strongly suggest that you pick up a copy of a great new book called Built to Sell, by John Warrilow.
Covering every important aspect of the process, from attracting multiple bidders to getting the most for your business, this book easily explains what you must know and do if you want to create a business you can sell. Steve says check it out!
Steve Strauss is one of the world’s leading business experts, a popular speaker on the business lecture circuit, and is sure to leave any audience thrilled. A columnist for USA TODAY, lawyer, and author, his latest book is The Small Business Bible: Everything You Need to Know to Succeed in Your Small Business. You can sign up today for his free newsletter, “Small Business Success Secrets!” at his website – www.mrallbiz.com