Health-Care Costs a Top Concern for Small Business Week

The National Federation of Independent Business (NFIB) is highlighting health-care costs as one of its top concerns this National Small Business Week.

Amanda Austin, director of Federal Public Policy for the NFIB, said the cost of insurance is the number-one issue the organization has heard about consistently for the past two decades from its members.

"Small businesses are least likely to offer coverage because of the significant cost issues," Austin said. "With that comes the policy issues that affect cost and coverage. The [Patient Protection and Affordable Care Act] is the most important and influential thing affecting the cost."

President Obama's reform act has exacerbated the problem for small businesses, as far as Austin is concerned.

"Either businesses can hunker down and absorb the cost, or stop offering coverage, which is the opposite of what health-care reform is about," Austin said. "It's a competitive business decision on whether to offer coverage or not. Individuals ought to be able to access other avenues for health insurance on their own."

In highlighting the high cost of coverage for small businesses, the NFIB offered these solutions for lowering the cost health insurance:

No. 1: Defined contribution plans. This option has a pre-tax dollar amount provided by the employer to their employee, and the employee then makes their own decisions about their health-care plan. The NFIB said because small business owners often lack human resource departments and market power, this allows them to contribute to their workers' plans without actively choosing, managing or purchasing their plan.

No. 2: Equal tax treatment in the individual market. The NFIB believes that tax breaks available in the employer-sponsored market should also be available in the individual market, where many small businesses purchase coverage. This is currently discouraged in the U.S. tax code.

"Employees can only use pre-tax dollars for insurance if their employers choose, purchase and administer their insurance policies which creates several well-documented problems: the individual market is small; administering health insurance distracts employers from their core businesses; the employee/insurance nexus creates “job lock”, where employees cannot leave a job for fear of losing health insurance; with employees unable to shop around, insurance is less competitive; differences in tax treatment should not determine whether a person secures health insurance in the workplace or on their own," the NFIB said in a release.

No. 3: Insurance portability. This would allow individuals the ability to move from job-to-job, job-to-no job and state-to-state without loosing coverage.

No. 4: Interstate markets for health insurance. Small businesses and individuals would be able to "pool risks" and purchase insurance across state lines under this option, the NFIB said. The fully-insured market, which small businesses and individuals fall under, currently cannot do this, while large businesses, labor unions and governments can all access interstate markets.

No. 5: Malpractice reform. The NFIB said medical liability laws should "limit non-economic damages, rationalized economic penalties for malpractice, and offer options for arbitration and no-fault malpractice insurance." The current system raises costs and damages doctor-patient relationships, the organization said.

Be sure to visit Wednesday for our coverage of small business confidence this election year.