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Eve Tahmincioglu

Primary author Eve Tahmincioglu has been covering small business and entrepreneurship for more than a decade. She regularly writes about small business issues for the New York Times and BusinessWeek's SmallBiz magazine. She also writes the Your Career column for MSNBC.com. She is the author of "From the Sandbox to the Corner Office."



It's about health care costs, stupid

Posted: Tuesday, June 10, 2008 4:05 AM by Eve Tahmincioglu
Filed Under: , , , , , ,

What’s bugging small business owners? Costs, costs, costs, especially health care costs.

This week, I’m attending the National Federation of Independent Business’ National Small-Business Summit and what better topic than what’s bugging entrepreneurs most?

Yesterday the NFIB released its "Small-Business Problems and Priorities" survey, which it conducts every four years, and small business owners have one big problem – the cost of doing business, in particular health insurance costs, energy costs and inflation.

OK, I know this news probably doesn’t take any of you by surprise, but it does not bode well for the economic climate going forward.

According to the report: Half of the top 10 problems worrying small business owners appear in the “costs” cluster, with the cost of health insurance continuing its 20-year reign as the number one problem for small business owners. More than 56 percent say it is a “critical problem.”  Other cost issues in the top 10 include the cost of fuels and electricity, supplies, inventories and worker’s compensation insurance.

And of course, taxes are up there on the list. Federal taxes on business income, property tax and state taxes on business income. The complexity of the tax code made its debut on the problem list this survey.

“As the economic downturn persists, small business owners are even more challenged by the costs of health insurance and the complexity of taxes,” said Rebecca Macieira-Kaufmann, executive vice president and head of the small business segment of Wells Fargo, the sponsors of the survey.

But there’s hope you guys are resilient.

“For four years, the economy provided a good, stable foundation for small business owners to do business, but as it started to take a negative turn over the last several months, they felt the effects of rising costs of doing business as reflected by these results,” said Bruce D. Phillips, Senior Fellow at the NFIB Research Foundation. “As the economic outcome remains uncertain, small business owners are searching for innovative ways to reduce expenses and increase sales.”

Entrpreneurs better start innovating ASAP, because based on what I got from the NFIB meeting yesterday, help with soaring health care prices will not come soon.

There's a bipartisan health care bill that the NFIB is supporting that will provide more choices for small business owners and the ability to buy insurance across state lines. The group's president Todd Stottlemyer is excited about the legislation but even he admited yesterday little will come of it this year.

And it's unclear if it will ever see the light of day.

Former Sen. Bob Kerrey moderated a health care panel during the NFIB event, and he had the gloomiest assessment of health care reform, saying "It's going to be a very hard proposition for the members of the House and Senate to solve."

Let's hope they're up for the challenge.

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Comments

Before the gasoline prices went through the roof, health care costs were what was driving the economy into ruin. Increased costs affect every business' bottom line. We need to get a handle on medical, drugs and service expenses. Hospitals can't handle the expense of all the non-insured people they serve.
Those costs get passed on to insured consumers and further drive the costs higher. Then the insured consumer has to fight with the insurance company over what they don't cover. Its almost better to not be insured for catastrophic events. I could go on and on.

Debra (Sent Tuesday, June 10, 2008 6:31 PM)

No business would allow an unnecessary, amoral, greedy middleman to divert 31% of its revenues before any products or services could begin to be delivered, but that's what private health insurers do with our health care dollars.  I say get rid of them and free up the market including our choice of providers.  Not until consumers are united into one very large and very protected pool under one set of nondiscriminatory rules for our health coverage, will we have the base we need to begin to fix what else is wrong with the rest of the system.

B. Spoon Charleston, IL (Sent Wednesday, June 11, 2008 12:17 PM)

The cost of healthcare is extremely high in the US.  Therefore, so is the cost of health insurance.  Most of the groups we see have at least a $300 single cost per month-and some of our largest groups are closer to $400.  A larger "pool" is not the answer-you have to have a pool that is balanced with young, old, sick, healthy.  Small employers tend to NOT grow with that kind of number in their budget per employee, and end up only covering a few people. Especially when the minimum percentage that they have to cover is 50% of the single rate.

Joe M. Orlando FL (Sent Wednesday, June 11, 2008 11:09 PM)

We have the pool that we have.  Why don't more  Americans "get" this?  We are one national pool of over 300 million people whether we realize it or not.  When 47 million (and growing) of our group are rationed to zero with wait times until after it's too late, then we win all the booby prizes for rationing, wait times, easily preventable bankruptcies, disabilities and deaths, as well as out-of-control costs and endless court cases over who has to pay the bill.  We ALL pay the bill one way or another. One pool under one set of nondiscriminatory rules would provide the transparency we need but now lack to fix what is wrong, including quality and costs.  Now we are divided and conquered in myriads of aptly-named "risk groups" where no one knows who is paying how much for what, and where we are all paying vastly disparate prices for precisely the same things.

B. Spoon, Charleston, IL (Sent Thursday, June 12, 2008 9:00 AM)

The problem with health care costs is a simple matter of economics. The AMA controls what schools can confer Medical Degrees and how many they can grant a year. That's it, there's nothing more to it.

If you had a great demand for chemical engineers colleges all over the country would be churning out degreed chemical engineers left and right. That doesn't happen in the medical field because the cartel that controls the supply of MDs wants the supply of doctors to be scarce so they can make a lot of money. End of story.

Connor Smith (Sent Saturday, June 14, 2008 9:13 PM)

The AMA does not control medical schools.It is an organization for licensed physicians. The issues are complex and do not have a simple straightforward solution. Check out the per capita MDs in the US compared to other advanced countries tofind out the answer.

S.Gadasalli M.D. Odessa Texas (Sent Wednesday, July 02, 2008 4:42 PM)

This AM while driving to work I heard that the EU (European Union) is negotiating a "deal" where an insured individual from one country within the EU can get medical care from another EU country.  The cost for the care would be charged back to the country where the patient resides.  Greater competition between medical providers?  Will quality improve due to this type competition?  Could the United State participate in such a program?  I thought that this was interesting "food for thought" ie, global health!

Steven D. Coffeen (Sent Wednesday, July 02, 2008 4:49 PM)

Dr. Gadasalli, I'm no sure what you were getting at with number of doctors per ca pita.  I checked and Canada is at 2.2 vs. 2.4 per 1000; 1.7 and 3.0 per thousand for England and France respectively.  Our medical professionals are paid higher, but they also have higher expenses for education and malpractice insurance.
The biggest factor in the high and increasing cost for health care in this country appears that we have a market based system for it whereas other countries have more government intervention.  While the consumption of medical care is controlled by each individual they for the most part only pay for a small portion of the bill with the balance paid either by the government through Medicare and Medicaid or through insurance provided by the consumer's employer.  With the consumer insulated from the total cost of the good consumed it causes a perversion of the market mechanisms that would hold down consumption of the product and insulates the providers from cost constraints of having to deal directly with the consumer.  
At this point we are stuck with the system that we have and significantly changing it is going to be very difficult.  We're not going to be able to cut the amount we are spending unless we enter into something as draconian as what Mr. McCain is proposing with making the individual responsible for obtaining their own heath care.  Our system as it is now constituted doesn't have the ability to ration care in order to contain costs; just look at what happened with managed care in the 1990s--people were all for the lower or static cost until they found out that care might be limited, then they went nuts.  
In the rest of the world health care professionals make less, drug companies must charge less, and hospitals are limited in the reimbursement they can attain for treatment.  Our cost containment mechanisms have not worked to keep us competitive with the rest of the world.  On the other hand I can get a joint replaced whenever necessary it just comes out of the bottom line of my company instead of as a bill from the people providing the service.

Tom Fiore, Morrison, CO (Sent Wednesday, July 02, 2008 8:20 PM)

I am tired of being expected to bail out people for being stupid.  You knew your city and business we in a flood plain, then your city let developers bulldoze trees and pave concrete over every inch of the city so that water runs off very fast overloading systems designed at best in the mid 50's refused to pay the
rates for flood insurance because you thought they were to high, the flood rates were high because you are in a high risk flood area.  You ignored all of the previous weeks and days of rain to moving your property that could be moved to high ground, when the water started getting close to your school or business you worked like heck at the last minute to avert the flood waters, but you refused to vote for city iniatives to build canals for years, refused bond issues to pay for designing and building new levees.  While the waters were flooding towns upstream you waited to see if their levees would
hold and like little dominoes your system failed
too little too late.

William Hayes, Edmond Ok. (Sent Tuesday, July 15, 2008 7:47 PM)



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