Supreme Court Ruling is a Major Blow to Entrepreneurship, Small Business Owners

In reaction to the ruling by the U.S. Supreme Court today on the "Affordable Care Act," the Small Business & Entrepreneurship Council (SBE Council) said the decision that keeps intact most of the law - including the individual mandate being deemed constitutional as a "tax" - will continue to impose a heavy burden on small business owners and entrepreneurs, thus harming the economy, U.S. competitiveness, job creation and the future of entrepreneurship.

"Most self-employed Americans and small business owners would purchase health insurance for themselves and their employees if they could afford it. The costly, tax-laden health care law with its individual mandate and intrusive regulations missed this entire point.  Rather than providing Americans with affordable choices through better competition, the health care law coerces Americans to buy packages designed by government bureaucrats in markets micromanaged by government bureaucrats," said SBE Council President & CEO Karen Kerrigan.

"The individual mandate serves as a gateway to more coercion, where small business owners and individuals will be forced to purchase any number of goods or services that political elites deem in their 'best interest.'  Today's ruling by the Supreme Court undercuts freedom, which is essential to economic growth and entrepreneurship.  Entrepreneurship is on the decline in the U.S., and we need policies that will encourage risk-taking and start-up activity.  Intrusive government policies and punishing taxes, like the Affordable Care Act with its individual mandate, work against a vibrant entrepreneurial ecosystem, " observed Kerrigan.  

SBE Council Chief Economist Raymond Keating added:

"The U.S. Supreme Court's decision to uphold ObamaCare is an egregious, irresponsible decision that ignores the clear intent of the U.S. Constitution to limit the powers and reach of government. By allowing the government to force individuals into a commercial transaction just because they are citizens, it's hard to think of any limits that can be placed on federal power - as long as such action is called a tax.  As bad as the regulatory environment has been in this nation, the federal government's power to regulate has now de facto expanded. It is critical that Congress step in, and unlike the Supreme Court, abide by the Constitution and repeal the monstrosity that is ObamaCare. If not, the ObamaCare mess of costly taxes and regulations and a vast expansion in federal spending will proceed, along with the threat of an unbridled federal government going on other activist sprees."

According to SBE Council, the U.S. needs a competitive health insurance market, which means it needs a national marketplace with ample choices for small business owners and entrepreneurs.  A competitive, national marketplace will produce affordable and innovative choices for small business owners, not one controlled by government.

SBE Council will continue to urge Congress and President Obama to pare back many elements of the health care law that hurt small businesses including the employer mandate, the individual mandate, the health insurance tax, the litany of individual tax increases in the legislation, and "one-size-fits-all" regulations where the federal government is dictating the types of packages that must be offered in the marketplace.   In addition, the group is pushing for improvements to Health Savings Accounts (HSAs), which have given small business owners more choice in health coverage but experienced a set back in the new health care law because it imposed various restrictions on usage.

Small Biz Health Care Daily: Views on Health Care Reform

The costs of the health care reform measures being pushed by President Barack Obama and congressional Democrats would be huge. But what would be accomplished? According to a Gallup Poll released last week, many people seem to think that either nothing will change or matters will get worse.

For example, on the question of whether medical care would improve, worsen or not change, for the U.S. in general, 44% said improve, with 34% saying worsen and 14% no change – so, 48% say it will either worsen or not change. When asked about their personal medical care, 26% said improve, while 34% said worsen and 29% no change – with the worsen/no change responses tallying up to 63%.

What about expanding access to health care? For the U.S., 47% said it would expand, 29% reduce, and 13% no change – with the reduce/no change responses totaling 42%. As for personal access to care, 21% said expand, 29% reduce and 39% no change – with the reduce/no change group adding up to 68%.

Finally, on health care reform’s impact on health care costs, for the U.S., 45% said costs would increase, 30% said costs would be reduced, and 14% no change – so, the combination saying increased costs or no change registered 59%. In terms of personal costs, 34% said increase, 18% reduce and 33% no change – with the increase/no change group coming in at 67%.

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

“The hefty amount of skepticism among the American people regarding the quality, access and costs of health care under reforms that would vastly expand government’s role in health care are completely justified. The costs of the health care measures advocated by President Obama and congressional leaders will be massive for taxpayers in general – and most certainly for small businesses – but solid percentages of Americans expect either no change or a worsening of the health care situation. And they’re right. The economics of government-run health care point to higher costs and reduced access to quality health care.”

Support for ObamaCare?

The Wall Street Journal just reported that the latest Wall Street Journal/NBC poll shows that more people oppose than support the health care agenda being pushed by the President and Democratic leaders in Congress.

The Journal noted:

Support for President Barack Obama's health-care effort has declined over the past five weeks, particularly among those who already have insurance, a Wall Street Journal/NBC News poll found, amid prolonged debate over costs and quality of care.

In mid-June, respondents were evenly divided when asked whether they thought Mr. Obama's health plan was a good or bad idea. In the new poll, conducted July 24-27, 42% called it a bad idea while 36% said it was a good idea.

Among those with private insurance, the proportion calling the plan a bad idea rose to 47% from 37%.

People have good reason to be skeptical of what would be, in effect, a government takeover of health care in this nation, with an accompanying rise in costs and decline in quality of care.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Massachusetts Care: Whoops

With its individual health insurance mandate, “play-or-pay” mandate on businesses (either provide employees health insurance or pay a tax), and expanded government funding, Massachusetts’ health care package passed in 2006 has been something of a model for those advocating more government involvement in health care at the national level.

But now comes the following news, as reported in the July 15 New York Times:

The new state budget in Massachusetts eliminates health care coverage for some 30,000 legal immigrants to help close a growing deficit, reversing progress toward universal coverage just as Congress looks to the state as a model for overhauling the nation’s health care system. The affected immigrants, permanent residents who have had green cards for less than five years, are now covered under Commonwealth Care, a subsidized insurance program for low-income residents that is central to the groundbreaking health care law enacted here in 2006…

In addition to dropping the immigrant insurance program, Commonwealth Care will save an estimated $63 million by no longer automatically enrolling low-income residents who fail to enroll themselves.

What can be said? Whoops.

Maybe more government involvement in health care – including mandates and more spending – isn’t such great ideas after all.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Healthy Views

This summer promises to be long and hot when it comes to the debate over health care policy. Much has been and will continue to be written on the topic. But I wanted to draw your attention to three important pieces penned recently.

• A doctor shares his skepticism regarding the leading health care reform measures in the Chicago Tribune. Donald Palmisano explains how these measures could quickly wipe out what has taken decades to build.

• Writing in The Wall Street Journal, Scott Harrington, a professor of health-care management and insurance and risk management at the University of Pennsylvania’s Wharton School, lays out his case for why a government-run insurance plan will crowd out private insurers, and make a single-payer system inevitable.

• And the Wall Street Journal’s editorial page did an excellent job at picking apart the Obama Administration’s assertions regarding the costs of its health care agenda.

Each warrants reading.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Obamacare – Not So Caring

Why exactly are President Obama and various leaders in Congress trying to push the United States further down the path of big government health care? After all, when you actually look at what health care is like in nations with socialized medicine, it’s not pretty.

The June 9 Wall Street Journal published an important piece by Dr. David Gratzer, a physician, titled “Canada’s ObamaCare Precedent.” The entire article warrants reading.

But here are some key points made.

• Gratzer, born and raised in Canada, believed in the country’s single-payer system. Until, that is, he went to medical school and saw that patients in Canada pay a steep price in terms of having to “wait for practically any procedure or diagnostic test or specialist consultation in the public system.” He offers a couple of scary examples.

• He notes that the Ontario government sent 160 patients to the U.S. for emergency neurosurgery between 2006 and 2008.

• ER patients do not receive the care they should.

• Canada suffers from a severe physician shortage.

• He also notes studies that find superior care in the United States, including for the poor.

• And what is growing in nations like Canada, Great Britain and Sweden with nationalized health care? Private hospitals and care.

The push for ObamaCare rest on two mistaken assumptions. First, that government will run health care more efficiently, and therefore, money will be saved. Any economist worth his or her salt will tell you that is a preposterous assumption. Second, the quality of health care will rise. Again, economists will note that government lacks the incentives to do things well. That is backed up by evidence about socialized medicine from around the world – in particular that care is rationed.

Costs do not just come in the form of dollars. They also come in terms of waiting periods and reduced quality.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Some Sanity on Health Care

A great push is under way to get government more involved in health care, with taxpayers picking up ever larger portions of the tab. This path, however, will only lead to higher costs, and eventual rationing of care and price controls.

But in the marketplace, many businesses are capitalizing on positive health care reforms. The May 29 Charlotte Observer, for example, reported on the use of health savings accounts. The Observer pointed out:

The future of health insurance likely lies in personal spending accounts rather than traditional copayment plans, business leaders said Wednesday at a health care summit hosted by the Charlotte Chamber.

Though still making up a small percentage of medical insurance plans, health savings accounts and health reimbursement accounts are gaining in popularity as Charlotte-area businesses of all sizes look to cut costs.

Health savings accounts allow people to save money in an account designated solely for health care expenses. Employers often pay into the accounts as part of a benefits package, but all money in the accounts is owned by the individual…

About 8 million people nationwide are enrolled in health savings account programs, up 31 percent since last year and a seven-fold increase since 2005, according to the America's Health Insurance Plans association.

That’s a positive trend – a little sanity in the otherwise insane debate over health care in this nation.

The Observer also noted:

There is a chance that national health care reform that President Obama has promoted could eliminate these kinds of health coverage. But Austin Pittman, chief growth officer at UnitedHealthcare of the Carolinas, said he doesn't see that happening.

We all have to work to make sure that Mr. Pittman is right.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

The New McGovern Liberal

At one time, the most damaging label a conservative or Republican could hurl was to call an opponent a “McGovern liberal.”

That’s because George McGovern, former U.S. senator from South Dakota and the Democratic Party’s 1972 nominee for U.S. president, was as liberal as they came. Indeed, he might just have been the most left-wing presidential candidate in our nation’s history.

But George McGovern has changed, and we sure could use some more of this new kind of McGovern liberalism.

Just check out an op-ed written by McGovern that ran in the March 7 Wall Street Journal titled “Freedom Means Responsibility.”

McGovern made a well-reasoned, pro-free market case against both the left and right moving to impose increased regulation on subprime mortgages. Similarly, he noted that politicians that want to ban payday lending would generate all kinds of negative “unintended consequences.”

And finally, McGovern addresses a critical issue when it comes making health care more affordable. The former senator wrote:

Health-care paternalism creates another problem that's rarely mentioned: Many people can't afford the gold-plated health plans that are the only options available in their states. Buying health insurance on the Internet and across state lines, where less expensive plans may be available, is prohibited by many state insurance commissions. Despite being able to buy car or home insurance with a mouse click, some state governments require their approved plans for purchase or none at all. It's as if states dictated that you had to buy a Mercedes or no car at all.

Hooray for the McGovern liberal!

A Loss for California’s Terminator … Thankfully

A health care agreement between Republican California Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez, a Democrat, was billed as a bipartisan effort, and would have inflicted massive costs on California taxpayers, including businesses, and the state’s economy.

In reality, there was significant bipartisan opposition to this plan.

It went down to defeat on Monday, January 29, in a Senate Health Committee led by the Democrats. The Sacramento Bee noted: “‘It's really a misnomer to term this as a bipartisan effort,’ Sen. President Pro Tem Don Perata, D-Oakland, said after the Senate Health Committee voted to block the bill, AB X1 1.”

The Bee also noted: “During a yearlong campaign for his No. 1 priority, however, Schwarzenegger was unable to persuade even one Republican lawmaker to join him.” And a bit later: “Republicans … warned that requiring most employers to contribute to their workers' coverage would force many small businesses to close.”

The measure would have been a massive expansion of government into health care, with an annual tab estimated at $14.9 billion. The funding scheme included a play-or-pay tax on employers, higher taxes on hospitals, a $1.75 increase in the tax on a pack of cigarettes, and more money from federal taxpayers.

Will lawmakers in California learn a lesson and choose another path that makes economic sense, such as deregulation and mandate relief that would make insurance more affordable?

Well, the newspaper quoted Schwarzenegger declaring: “"If it were easy, California would have gotten universal coverage 60 years ago – that's when Governor Earl Warren's reform plan fell short by a single vote.” That’s not exactly encouraging.