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Small Businesses Owners Optimistic About Health Care Overhaul

Carolyn Beeler
03/29/2010

Now that the health care bill has passed into law, President Obama is busy drumming up support for the new legislation. He visited Iowa City last week to sell the plan, telling people there it's good for business.

TRANSCRIPT

Obama: "This health care tax credit is pro jobs, it is pro business, and it starts this year and it's starting because of you."

KUOW's Carolyn Beeler talked to small business owners in Seattle about how they expect to be affected by the plan.

Sharon Shaw sells stained glass kaleidoscopes at Seattle's Pike Place Market. She and her husband make them by hand. She likes to set up in a corner booth, where there's a lot of foot traffic.

Shaw: "I like to take this spot right here, number 50. Or any of these within this location right here is where I'm generally set up."

Today her booth is closed. She has to shut it down sometimes so she won't make too much money. That's because if she did, she, her husband, and their two kids would lose their health insurance. They're covered by the state's Basic Health Plan. That offers health insurance to low income citizens. A family of four must earn less than $44,000 a year to qualify.

If she had to buy private insurance, Shaw says it would cost more than her monthly mortgage payment.

Shaw: "It's insane, it's not affordable, it's not possible for us to even come close to affording that."

Beeler: "You mention if you make a certain amount you have to close. Can you tell me just in basic terms what that means?"

Shaw: "Sure, I have guidelines set up in a twelve-month period as to what the top amount is for us to earn wherein I would have to then scale back or close the business if I've gone over that amount. So I actually know at the end of each month, or in the middle, I have to start in the middle, 'Ok, am I coming close?', and I have to predict what are the next two weeks gonna be like. If I've had a super good day on one day I'll have to think, 'Oh ,you know what maybe we shouldn't do Friday, maybe we shouldn't do Saturday, maybe we shouldn't do Sunday because we'll be over.' And it's a gamble, it's crazy that we have to limit our income because of health insurance."

Shaw hopes the new federal health care legislation will change all that. Under the new plan, states will be required to set up exchange programs. Individuals and small businesses can pool together to buy insurance.

Shaw hopes that collective buying power, and the subsidies for lower income people, will finally make private insurance affordable. That way she could open her booth every day, maybe hire an employee, and sell more kaleidoscopes.

Shaw: "For my business it will definitely increase our capability to earn more money, to really not be concerned about day–to–day expenses and knowing that we would not be limited by what we earn."

But experts aren't sure how the exchanges will affect insurance premiums. A report from the Congressional Budget Office suggests the exchanges will lower insurance premiums for people like the Shaws.

Aaron Katz is a public health professor at the University of Washington. He says the exchanges are designed to allow for tighter regulation. And they're supposed to make it easier for small businesses to shop around to find the best coverage for employees.

But Katz isn't sure how much the exchanges will cut costs.

Katz: "I think of 'em as sort of Amazon.com for health insurance. The theory is that these exchanges will be ways of organizing a marketplace so that there's more price competition and competition for people's business. Whether that happens I think is a little unknown. These exchanges are relatively newfangled ideas, I don't know that there's good evidence yet that the exchange will lower prices, but that's the theory."

States will be required to have the exchanges up and running by 2014.

But there are changes that will start immediately. Small businesses now qualify for tax credits worth up to 35 percent of what they pay for their employee's insurance.

JB Brick is a Pike Place Market vendor who's happy to hear that. She runs a T–shirt and sweatshirt stall, and has a handful of employees who each work one day a week. She can't afford to insure any of them.

Brick: "It sucks. I hate it, it makes me feel horrible and irresponsible. But I couldn't stay in business and do it, the way things were. So it's a really horrible feeling not to be able to provide basic welfare for my employees. But with the price of insurance, I would be out of business in months."

Beeler: "And how will this health care bill affect you and your business?"

Brick: "Well I'm hoping that with the new plan I'll be able to help them have insurance. I think with what they've passed that would be more feasible than it has been in the past, because I would have more buying power."

Brick would also likely qualify for the small business tax credit. But public health professor Aaron Katz says the credit probably won't make many people insure their employees.

Katz: "The research suggests that if the goal is to get more small businesses to offer coverage you probably have to offer much, much higher than 35 percent, and the reason is you know that small businesses operate on very small margins, so it's actually proven very, very difficult to get small business who don't provide coverage to start providing coverage."

Katz says even if many small businesses still can't afford to insure their workers, it will be easier and maybe cheaper for those workers to buy their own insurance.

According to President Obama around 32 million new people nationwide will be insured under the legislation.

And Katz says that health care stability will be good for individuals and the businesses they work for.

For KUOW News, I'm Carolyn Beeler.

© Copyright 2010, KUOW

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