Taking the Pulse: Oregon Small Business Ready to Pay Fair Share for Health Care

Jo Ann Hardesty

Everybody knows that small businesses in Oregon and across the country are struggling with health care. As rates continue to skyrocket, small businesses are paying an arm and a leg for questionable coverage that often doesn’t meet their needs. At the same time, lots of people (including Members of Congress, state lawmakers, and the public too) will be looking to small business to find out what they think should be done to fix the health care crisis.

Rather than guess what small business owners want, the Oregon Action Small Business Council went out and asked them. Formed in September 2008 to give Oregon small businesses a new voice on health care, the Council’s first initiative was to participate in a national survey project to get a sense of how small businesses are coping with health care challenges and what they think about different proposals for reform. Council staff and volunteers went door to door on main streets in Medford, Grants Pass, Ashland, Corvallis, Portland and other towns, meeting small business owners face to face and inviting their input on the survey.

The result is a new report, released Thursday, called Taking the Pulse of Main Street: Small Businesses, Health Insurance, and Priorities for Reform. Along with national analysis, the report includes state-specific breakout pages for Oregon with survey results and stories of impacted Oregon small business owners.

In brief, here’s what the Oregon survey results showed:

1. Oregon small businesses are struggling with health care, and being forced to compromise quality and security to keep coverage at all: Less than a third of small employers surveyed could offer coverage to employees, and only two out of five had coverage for themselves through their business. More than half of those with coverage reported switching to insurance with higher out-of-pocket costs (57 percent) or covering fewer services (also 57 percent).

2. Oregon small business owners are willing to contribute, but can’t go it alone: When asked if they’re willing to contribute for health coverage for their employees, four out of five small employers said yes. More than half (51 percent) indicated they would be willing to pay 4-7 percent of payroll (in some cases, 8-11 percent or more) to guarantee quality, affordable coverage for themselves and their employees.

3. Oregon small business owners want a quality public alternative to private coverage, and are looking to government to play a stronger role: When asked to choose between a proposal with a public insurance alternative and a proposal with more private market choices, small business owners chose the proposal with a public alternative by a margin of more than two to one (56 percent to 26 percent. When asked about public oversight and the role of government, small business owners supported more public oversight of the insurance industry by an overwhelming 88 percent to 5 percent, and supported a stronger government role in guaranteeing access to quality, affordable health coverage by a resounding 72 percent to 9 percent.

Dean O’Donnell, owner of Mountain High Grocery in Detroit, OR embodies the sentiments expressed through the survey. “As a small business owner, I’m willing to contribute for health care that puts service and value ahead of insurance industry profits,” O’Donnell said. “I believe we need a quality public option so we can’t be held hostage by the industry any more.”

With the economic crisis posing a serious threat to small business, the state budget, and our future prosperity, this issue of health care for small businesses is more important than ever. Small business, which has created 75 percent of net new jobs over recent years, holds the promise to create the jobs we need to help revitalize the economy. But to allow small business to fulfill that promise, we’ve got to fix this health care mess – for small business owners, their employees, and the communities they serve.

The report Taking the Pulse of Main Street: Small Businesses, Health Insurance, and Priorities for Reform is available online – go to http://mainstreetalliance.org and click on the “publications” link to download the report and view state charts.

(forgive me, I don't how to put the web link into a post yet!)

  • BOHICA (unverified)

    Link to the report.

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  • Jiang (unverified)

    Good stuff. This is a really good example of why pols should collect more data and do less armchair analysis! I was just saying on another thread that there is a strong correlation between redistribution of GDP and happy citizens and this gives one, good, concrete example why.

    Dean O’Donnell, owner of Mountain High Grocery in Detroit, OR embodies the sentiments expressed through the survey. “As a small business owner, I’m willing to contribute for health care that puts service and value ahead of insurance industry profits,” O’Donnell said. “I believe we need a quality public option so we can’t be held hostage by the industry any more.”

  • Steve (unverified)

    Great idea! Small businesses are fighting to stay alive, so lets hit them with another employee cost now. If a small employer wants to contribute more, I don't think there is a law that says he can't.

  • BOHICA (unverified)

    Sole proprietors should be able to deduct 100% of their health insurance premiums. As it is now they cannot, like corporations can. Self-Employment Tax Deduction on Health Insurance Costs (PDF).

    This has always bothered me that corporations can claim "personhood" yet a real person does not have the same advantages.

  • Jiang (unverified)

    This has always bothered me that corporations can claim "personhood" yet a real person does not have the same advantages.

    You mean I just filled out that TARP application for nuthin'?

    Steve, that was the point. The people it affects the most can see the big picture and realize that having a better system will help them far more than watching every nickel and dime. To be sure, that takes mental discipline in these times, but the survey says they are up to it. Maybe that's projection, and I agree, if I were just saddled with a new cost and the overall environment stayed unchanged, I would consider closing. I think the survey respondents correctly realize that for a good, workable health care plan to be enacted, a lot would have to change, and that's the tacit assertion in the answers.

    It's sort of like if I said, "if we raise the 3 bucks or whatever that goes to federal campaign finance, and raise it to a fiver, because new legislation will guarantee ever minority party media representation", would you go for it? When you think about the sea change required, it's not about 2 dollars.

    BOHICA is right about the regs. It's really worth the $25/year to incorporate. Another aside would be why do we tax unemployment benefits? Are we going to tax TARP grants as profit?

  • YoungOregonMoonbat (unverified)

    If I remember correctly, wasn't taxing small business who did not provide health insurance to their employees supposed to be the main source of long-term funding for the Oregon Health Plan (OHP) until the waiver of exemption from the Employmee Retirement Income Act (ERISA) was never approved by Congress in 1997?

    The Democrat majority withstanding, how does taxing small businesses now to fund OHP make the practice exempt from ERISA?

    I want to know the legal side of this because if you only come at it from the mushy, mushy feel good point of view and never come at it originally from the legality point of view, then the only reality it will become is coffee table talk amongst a bunch of like minded liberals.


  • Kurt chapman (unverified)

    This is a very good thoughtful post. thank you. Not only would small business be interested in this approach, several medium to large business entities would also be very interested in turning over health care liabilities for 7%-8% of payroll. MA and RI are currently working with a "play or pay" approach that is intended to make insurance available to all and there is an ERISA blessing for this.

    Of course those plans mandate that all residents obtain some form of health coverage so maybe that is the difference.

    I would warn in advance, however that a universal approach will result in lower coverage options, higher costs for lifestyle type medications and rationing of care through longer waits for procedures.

  • Garage Wine (unverified)

    From the report:

    "Oregon, 84 small businesses participated in the survey, representing Ashland, Corvallis, Grants Pass, Medford, Portland, and other towns."

    The SBA says Oregon has 77,500 businesses with fewer than 20 employees.

    So the survey samples one-tenth of one percent of the smallest businesses in the state. I would not put a whole lot of stock into such a tiny survey.

  • Joanne Rigutto (unverified)

    I agree with what BOHICA said about the self employed and insurance deductions. My brother, who has employees, can deduct 100% of the medical coverage for his employees, I get to deduct half. Oh well, at least I'll be able to deduct 100% of the workers comp I'm going to be forced into getting on myself, even if I won't ever be allowed to use it....

  • (Show?)

    YoungOregonMoonBat is correct that the original legislation for the Oregon Health Plan would have taxed businesses who didn't provide health coverage. You can thank the lobbyist for killing that part of the plan.

    Garage Wine, While the report represents a small portion of small business owners so far we have spoken to over 400 small business owners who share this perspective.

    What we learned through this process is small business owners are another group that feel left out of the political process and they want a voice in health care reform. They understand the economic disadvantage suffered when they can't provide health care. The best stimulus package would take this burden away from small business owners.

  • SCB (unverified)

    I'm a small business owner, and I pay through the nose for a health care policy for my employee (1) and myself. We have a $5,000 deductible, and still pay around $700 per month.

    What commenter Steve above doesn't get, is that for most of us we'd be trading one cost for another. I would gladly pay more than $700 a month for health coverage that meant something.

    As it is, when I pay my health insurance bill, I know perfectly well that there are two major costs in that bill that have nothing to do with getting me good health care.

    First, I am paying for a very large work force of people who are dedicated to cutting payments for services, disallowing services, and otherwise denying me care. I am paying people to tell me "no" you can't have that live saving service. And that's just stupid.

    Second, I am paying stock holders and investors who profit by the denial of services to me.

    In one form or another, I have been with the same health insurance provider for about 18 years now. In total I have received about $2,500 of services that were reimbursed. I have paid more than $75,000 for insurance, and paid out of pocket more than $10,000 during that same time period.

    As a small business owner, I know there has got to be another way. Given the problems I note above, I think the solutions are obvious.

  • mp97303 (unverified)

    SBC nailed it. I too am a small business owner and have been since '93. In my last business, I was able to offer HI, but since I am in the start-up phase of my new business I cannot.

    THe biggest issue preventing me from offering HI is knowing that, even if we don't file a single claim this FY, our insurance rate will go up 20-40% next year. That lack of stability is a deal breaker at this point. The last thing I want to do is have to end HI for them once I offer it.

    Given that one single health insurer, UNH, has a gross profit of 18.325 BILLION Dollars for the last year, there has to be a better solution.

  • Dave Lister (unverified)

    We've been providing fully funded health insurance for our employees since we started business in 1985. For many years now we have been with HealthNet (previously QualMed).

    This year, for the first time ever, our renewal premiums DECREASED by approximately 8%. I was rather shocked to see this, but I tend to think the premium reduction is a reflection of the current economy. I'd like to think that health insurance costs have peaked, at least for now. We renewed with the same plan we have had for years, an HMO with a modest co-pay.

  • Greg D. (unverified)

    It sounds very nice that small businesses are willing to pay for health care coverage. Almost too nice to believe. I believe that the official spokesperson for small business is the US Chamber of (Repubican Whore) Commerce. As soon as the US Chamber issues a position paper indicating a willingness to back an employer tax of around 5% to match an employee tax of the same 5%, give me a call. Otherwise, I think the author of this post is smoking some of that (Oregon small independent business medical card enterprise) stuff.

  • mp97303 (unverified)

    I would be curious to know how much money the general public thinks small businesses make annually? Any guesses?

  • LT (unverified)

    My guess is that there are many small businesses with a wide variety of income/profit levels.

    Also that not every small business lets either the Chamber of Commerce or NFIB make their political decisions for them.

    SCB has a point. It is time for a major rethinking of health care. One of the origins of the public health movement centuries ago was that people with contagious diseases who cannot afford health care tend to infect those who do have health care. The idea behind public health was to prevent such contagion, among other things.

    It is now fairly accepted wisdom that someone able to get preventative screenings, help with weight, blood pressure, stopping smoking, and other problems costs the system less if seen by a doctor than if the problem gets worse and the person ends up going to the ER.

    Add to that the lost productivity of someone who is injured or ill and thus can't work.

    The whole system needs to be rethought from the ground up incl. every aspect of health care. If a store is not vigilant and a customer slips on a spill, what does it cost the company? If the person who slipped doesn't have health insurance and the company insurance rep. says they normally have the person get treated, send in the medical records, and they decide whether to pay the claim, what is the injured person to do?

    2 problems with that model of business insurance: 1) if the person is not insured and is low income, perhaps if it is marginal whether seeing a doctor would help (a sprain, for instance, rather than a broken bone), the injured person might decide not to get treated and have to deal with all the red tape, but also never darken the door of that business again and tell all friends why.

    2) if the injured person is related to a lawyer, and for some reason the person gets medical treatment and then the insurance company doesn't pay the claim, what if the lawyer goes to court and sues the company? How does that affect the earnings of that small business?

    I mention this because we are about to embark on a new time in this country, where putting people into groups (small business, low income, lawyers, etc) becomes less important than solving problems for the common good.

    So no, I don't really care what the combined income of "small businesses " amounts to--what role does that have in this discussion? We have had 2 small businesses in our family. Earnings differed from year to year and in both cases outside influences (the market for what the business did, competitors moving in nearby, etc.) was more important than some political debate about small business earnings generally.

    I believe there should be universal health insurance. Whether it should be paid for by businesses or some model where insurance companies don't get rich by complicating the lives of policy holders to earn money for shareholders is an open question.

  • Robert Harris (unverified)

    Being a small business owner, the result of this survey isn't a surprise to me at all. But, if we go to the payroll tax, it really has to be single payer. Otherwise a mixed system will result in the worst of both worlds.

    No cost controls and the government mandating that businesses who now provide Health insurance continue to provide it PLUS pay the tax. (this seems to be a feature in most of the universal plans being promoted).

    A 4-7% payroll tax won't pay for what we have now, since the amount spent on health care in the US is about 16%. On the other hand, a country like Denmark, which has single payer, and is highly rated in all areas of health, has a payroll tax of 8% which pays the vast majority of their univeral care. (they have some co-pays, and 30% of the population continues to buy supplemental health care coverage as a fringe benefit for employees)

    As a small business owner, I'm most concerned about half way measures that are meant to pacify the health insurance industry as a way to transition to single payer. Frankly, I almost prefer the current system to the half way proposals.

  • andy (unverified)

    The primary issue with health care is that most everyone wants someone else to pay for it. People are always asking for more options, more procedures, more medicine, etc but most people aren't willing to pay for it. Sorry, there isn't a free lunch. If people want all kinds of medical advancements and treatments then they need to be willing to pay for it.

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