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Smallest businesses support private insurance over federal plan, oppose mandates

U.S. entrepreneurs are ready for major changes to the American health care system, but are asking the federal government to implement various proposals to help them cope with the costs. When asked for the most important component of health reform, 60 percent of micro-business owners cited cost containment, even over access and choice. Nearly 2,000 micro-businesses, including members of the National Association for the Self-Employed (NASE), took part in the national survey of their opinions on current health care reform proposals.

Most micro-businesses, companies with 10 or fewer employees, are closely following the health care debate. When asked how many had heard the term “public option” in relation to discussions surrounding reform, two-thirds indicated they were familiar with the term, and of those, 71 percent identified it correctly as "a health insurance program run by the government and open to anyone in need of health coverage."

Most entrepreneurs are strongly opposed to a “public option.” Rather, they prefer a free market approach, wherein business owners can work with private insurance carriers instead of purchasing a federally managed plan. Seventy-one percent said that they would choose a private insurer when given the choice to purchase the exact same health insurance policy at the exact same price from either a private insurer or the federal government.

"Micro-businesses are distrustful of the federal government and its ability to manage health care," commented Kristie Arslan, executive director of NASE's legislative offices. "They continue to bear witness to how the government creates inequities in the tax code, increases red tape and poorly manages their budget. If the self-employed were to run their business in the same manner as the federal government, these entrepreneurs would have been out of business a long time ago. Likewise, business owners do not feel that they should put their health care in the government’s hands via a public health plan."

When asked about various market reforms, micro-businesses were most supportive of these choices:

• Create an exchange or marketplace to facilitate the purchase of quality, affordable health coverage by allowing small businesses and individuals to easily compare and purchase the plans of their choice;
• Require health insurance carriers to provide health insurance to all those who apply regardless of their health status;
• Allow small businesses to group together via associations or organizations to purchase health insurance; and
• Create nonprofit insurance cooperatives across the country, organized by the government but owned by the cooperative members, in which small businesses and uninsured individuals can purchase health coverage.
  

As health care costs continue to rise and the current system lacks equitable tax treatment of health care costs for the self-employed, micro-businesses are stronger than ever in their opposition to federally imposed mandates. Respondents were more amenable to the idea of mandates if they received a considerable subsidy, such as a health tax credit, that would help them defray costs.

According to Arslan, "the ailing economy makes it difficult for this segment of the business population to survive an employer or individual mandate. However, the micro-business community is willing to compromise and accept a mandate, if and only if it is accompanied by meaningful financial assistance."

Other key findings:

• The top two health-tax proposals favored by micro-businesses are providing tax credits to businesses and the self-employed to offset health care costs and reforming the tax treatment of health coverage so that, regardless of whether health insurance is purchased individually or accessed through an employer, the worker receives the same tax benefits.
• The majority of respondents were neutral on a recent suggestion of a cap on the employer exclusion.
  However, there were quite a few who strongly opposed such a cap.
• Half of all respondents strongly opposed the recommendation to make taxable money used from health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs) to pay for health costs. Currently these funds are tax-free.
• When asked about a small business exemption to coverage mandates, 38 percent felt that using the number of employees as a benchmark was the right approach to determine the exemption. However, a number of respondents chose "other" and indicated that an exemption should be made based on a combination of factors, such as number of employees and revenue.

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