Health Care and the Small Business

Last Friday, Steve met one of his old friends, Jason, for drinks. Jason is a contractor and landlord in Cleveland. But he’s struggling. Not because there isn’t enough business. Not because of law suits or drunk employees. He’s struggling, because health insurance costs are too high. Larger contractors pay less per employee. Jason can’t compete with the larger contractors.

Our neighbors with their three kids have no health insurance. They own a paving company. They have a nice home and an SUV. Middle class in all ways except for a health plan.

Small business are being ruined, despite energy and dedication, because of the costs of health. Shouldn’t they be leading the charge for universal health care?

5 thoughts on “Health Care and the Small Business

  1. I’ve wondered this too, so I’m hoping someone more insightful than I will weigh in. All I have is anecdotal evidence: that universal health care advocacy is considered a blue idea, and it would take an awful lot to win the emphatically red votes of the (admittedly few) small business owners I know.

  2. Shouldn’t we consider how the “universal” health care is funded? If one replaces the employer-paid fringe benefits with employer-paid payroll taxes (as is the case with Medicare and Social Security) there will still be a wedge between marginal productivity and take-home pay. The small businesses’ problem is actually a suboptimal scale problem: the larger businesses face a smaller wedge for the same take-home pay. To substitute a tax-supported for a privately insured health benefit does not by itself address the size of the wedge.(Now to really complicate things, consider the exemptions small businesses enjoy from other forms of regulation … get larger to overcome the insurance wedge, confront other kinds of wedges. Messy. I’ll never lack for work disentangling it.)

  3. I know a number of small business owners with the same problem. They either face high health insurance costs or a whole swathe of potential workers won’t consider working for them. Some are simply very unimaginative, while others believe the nonsense that government provided healthcare would be costly and inefficient. But some are sensible, and, rightly in my view, think its not worth putting effort into the campaign because they won’t win.

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