Small Biz Health Care Daily: CEA, Small Business and Health Care

The White House has launched so-called health care “reality check” items on the Internet. One of these “reality checks” features a short video from Christina Romer, chairwoman of the Council of Economic Advisers, addressing how the health care agenda being pushed by the President and leaders in Congress would affect small business. According to Romer, these measures would work to ease “burdens for small firms.” She cites insurance exchanges, tax credits, and that “pay or play” mandates would not impact businesses with less than 25 employees. Romer also asserts that reform will be an improvement over the current system for small business.

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council, responded:

“As an economist, Romer has a very difficult job. That is, selling a health care agenda that makes no economic sense whatsoever. Given the third-party payer problem, government’s inability to control costs, the costs that come with mandates and regulation, and the destructiveness of price controls and rationing when government does try to rein in costs, it should be evident that this major effort by the Obama administration and leaders in Congress to inject more government control and funding into health care will not turn out well, including for small businesses.

“As for the specifics noted by Romer, insurance exchanges will not be an opportunity for small businesses to shop around for care – they have that ability now, by the way – but instead will serve as venues for government to regulate and impose mandates. That means fewer real choices and higher costs for small businesses. Any tax credits would be highly targeted, limited, and meaningless for most businesses. And the “pay or play” mandate – demanding that businesses either provide government-approved coverage or pay a tax – will do real damage to countless small and mid-size businesses, and as costs skyrocket, the reach of this mandate will expand, and the tax will rise. Finally, while Romer lays out the cost problems faced by small businesses regarding health care coverage today, she simply assumes that the current reform effort would improve matters. In reality, of course, the one thing we can count on is that when government gets involved, costs will climb even higher.”