Forcing Businesses to Offer Health Insurance Will Kill Jobs

By Dan Danner, President

National Federation of Independent Business

Congress is about to take up legislation that would have profound and long-lasting effects on 17 percent of our nation’s economy—our healthcare system.

Most Americans agree that the system is broken and it’s high time it’s fixed. Small employers, who have the hardest time offering and maintaining health insurance for their employees, are at the forefront of those demanding solutions now.

Yet many in Washington would address the problem by making all employers, large and small, offer health insurance. You just can’t force small business owners to pay for something they can’t afford. That would be the biggest mistake policymakers could make. This policy, if enacted, would do great harm and virtually no good.

  There are three arguments against this idea:

* It’s a regressive tax that falls mainly on low-income individuals, who will pay for this obligation through jobs lost, depressed wages and the erosion of other benefits.

* It doesn’t distinguish between those people who need help to purchase health insurance and those who don’t.

* It’s unfair to small businesses and their employees because it imposes punitive costs while ignoring their central problem—high prices resulting from their lack of market purchase power and the lack of a competitive insurance market.

 Reforming the insurance marketplace would do far more to help small businesses and their employees by ensuring greater competition. That in turn would encourage insurers to keep prices under control.

To simply pass a law that would force employers to do something they just can’t afford is destructive in any economic environment, but in these incredibly trying times, it’s absolutely lethal. And it would hardly have the positive effects so many are eager to claim. This policy, if enacted, would be a job killer, plain and simple.

A recent National Federation of Independent Business research project found that if you force employers to offer health insurance, it would destroy more than 1.6 million jobs (assuming the employer contributes half the cost). Small firms would suffer the most, accounting for 66 percent of the jobs lost.

Think about it like this, because it may give you pause: Employees won’t have health insurance, nor could they afford it, if they don’t have jobs. In a time when we’re looking to our country’s job creators—don’t forget small business creates two-thirds of new jobs each year—now is not the time to impose a new burden on the very people we’re counting on to lead us out of this recession.

   If we want to help Americans access healthcare, we need to tackle the real problem, and that is cost. We need to transform the broken marketplace of today into one where quality, affordable health insurance is available in the private market for everyone.

Dan Danner is president and CEO of the National Federation of Independent Business in Washington, D.C.



This Holiday Means Help for the Economy

National Federation of Independent Business

There’s disturbing news this month from America’s principal creators of new jobs—our small businesses.

According to a new National Small Business Poll: Access to Credit, fully one-quarter of small business owners fear the current economic downturn threatens their very ability to survive.

Read more: This Holiday Means Help for the Economy

Auto Bailout a No Go for Small Business

As Congress wrestles with the question of what do to about the problems with Detroit’s automakers, they should remember one thing. Small businesses owners are adamant: Don’t ask us to send our tax dollars to Detroit to pay for their mistakes without significant restructuring and effective independent oversight.

Read more: Auto Bailout a No Go for Small Business

A Look at the State’s Economy at Year’s Start

By Riley Johnson

Montana State Director

National Federation of Independent Business

Four barometers released last year could provide state lawmakers in Helena with some valuable clues on how to regenerate Montana’s economy, and what better place to start than a look under the hood at its engine—small business.

According to the U.S. Small Business Administration’s Office of Advocacy, small businesses are 97.8 percent of the employers in Montana. So what shape is the state’s economy in structurally?

About every four years, the Pacific Research Institute in San Francisco releases one of the most exhaustive reports on state economies. Its U.S. Economic Freedom Index: 2008 Report took a look at 143 indicators and categorized them in to five sectors: fiscal, regulatory, judicial, government size, and welfare spending. Montana has made some important strides, coming in a respectable 13th in economic freedom, up from 21st in PRI’s 2004 ranking and 26 in its 1999 ranking. The most notable improvement in the report came in the government-size sector where Montana soared from a dismal 45 in 2004 to eighth in 2008.

The Fraser Institute of Canada also issues a quadrennial report on economic freedom, not only for its own country, but for America, Mexico, and every state and province within. The institute’s Economic Freedom of North America, 2008 Annual Report rated economic freedom on a 10-point scale at two levels, the all-government (local, state, and federal) and the sub-national (just state and local).

The ten components were divided into three areas: size of government; takings and discriminatory taxation; and labor market freedom. After wringing Montana through these filters at the sub-national level, our state emerged tied for 35th best in North America with Mississippi, hardly a credential to boast about. Alberta was the only Canadian province with a better economic freedom ranking than Montana’s, which came sixth when compared with 10 other western states.

The Small Business & Entrepreneurial Council issues an annual report on business climates in each state. In its Small Business Survival Index 2008: Ranking The Policy Environment For Entrepreneurship Across The Nation, Montana comes in at a disappointing 33.

The SBE Council “ties together 34 major government-imposed or government-related costs impacting small business and entrepreneurship across a broad spectrum of industries and types of business.” Within those 34 bands, our state’s worst scores come in at workers’ compensation benefits per $100 of covered wages (50th), unemployment taxes (45th), and top individual capital gains tax rates (40th) categories.

A fourth barometer put out last year by America’s leading small business association, the National Federation of Independent Business, called Laissez Les Bon Temps Rouler 2008 (Let the good times roll): The Continued Rise in State Spending And Deficits, gives Montana fairly good marks.

In percent changes in inflation-adjusted state expenditures between 1992 and 2006, Montana came in 31st (33.76 percent), but in the inflation-adjusted revenue category for the same period, our state notched only 30.14 percent for 33rd place. What this means is that we’ve run a slight deficit, but not one as nearly as bad as other states (Arizona, for example, increased state expenditures by 79 percent, but revenue by only 54 percent).

So where should state lawmakers start tinkering in order to help right the economic ship of state? As the Small Business & Entrepreneurial Council’s report makes clear, the workers’ compensation system would be a good start. Workers’ compensation is a mandatory tax all businesses with at least one employee must pay in order to operate legally. While much as been done to address our state’s poor ranking in this category, Montana still has the fifth highest workers’ compensation rates in the country.

Another help would be eliminating the current 3 percent, business-equipment tax. Prior to the 1990s, there was a 12-percent business tax on personal business property in Montana. Over time, this was cut to 6 percent. In 1999 it was cut to 3 percent with a trigger that would eliminate the tax, if certain statewide economic conditions were met. This economy needs all the stimulating it can get. Time to pull that trigger.



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