Maryland has become the regulatory camel’s nose under the tent of American commerce. Soon enough the rest of the beast will push its way in, uprooting stakes and rope and bringing the whole canvas crashing down upon all inside. Baltimore was the founding home to the great-sounding “living wage” idea that many cities followed, only to find out how it actually punishes the people it was intended to help by shutting off job growth and the possibility of advancement.
Then last year, the Maryland legislature cooked up the so-called Wal-Mart bill, which was aimed at providing health care for workers without it. Like McDonald’s and Starbucks, Wal-Mart has been set up as the visual bogeyman for the social ills of America, primarily by people who have never run a business and never signed the front of a paycheck.
Proponents of the Wal-Mart bill said it only took aim at big companies in Maryland with more than 10,000 employees. They said small businesses, which struggle mightily to afford any medical coverage at all, would be kept out of harm’s way.
It was a lie then, and it’s a lie now—from proponents of Senate Bill 1414 here in California who have imported the Wal-Mart idea from Maryland. What SB 1414 would require is that firms with 10,000 or more employees in the state dedicate a certain percentage of their payroll (in Maryland it’s eight percent) to health care or pay an equivalent amount into a state fund for health care. In California’s case, that state fund would be Medi-Cal.
As the Wal-Mart bill moved through the Maryland legislature, Governor Robert Ehrlich warned it would harm his state’s economy by shutting off business expansion and job creation and—quite rightly—that proponents wouldn’t stop at companies with 10,000 or more workers and would eventually try to ensnare all firms. Ehrlich delivered on his promised veto of the Wal-Mart bill, but when it went back to Maryland lawmakers, they overrode his decision. Two months later, a new bill was introduced by the same crowd that succeeded in overriding Governor Ehrlich’s veto. It calls for the law to apply to all businesses in the state.
Small business owners and their employees are front and center in the health-care crisis. About 60 percent of the estimated 44 million Americans without health care come from homes where someone either owns or works for a small business. The cost and availability of providing health care for themselves and their employees has ranked as the number one concern (out of 75) among small business owners surveyed by the National Federation of Independent Business (NFIB). And it’s held the top spot for the past 20 consecutive years. On a national average, less than half of small business owners have health care for themselves and their employees, as opposed to more than 99 percent of corporations that offer medical coverage, according to NFIB and Kaiser Family Foundation studies.
A federal law prohibiting small business owners from banding together across state lines to form large purchasing pools for insurance—coupled with state laws adding more and more costly procedures to basic health-care plans—have conspired to drive medical coverage out of the realm of financial possibility for many small businesses.
Currently in Congress, efforts are underway to remove barriers to creating what are called Small Business Health Plans (SBHPs). Legislation creating SBHPs has passed the U.S. House of Representatives eight times, but only now is showing some progress in the U.S. Senate. President Bush has promised to sign the bill if it’s ever put before him.
SBHPs will provide small businesses the opportunity to band together through bona fide trade and professional associations to purchase affordable health benefits for owners and employees. By joining together, small employers will enjoy greater bargaining power, economies of scale and administrative efficiencies. In this way, these plans will level the playing field and give participating small employers the same advantages enjoyed by Fortune 500 companies and unions.
Two dynamics need to come together if state and federal policymakers are ever to make real dents in the number of medically uninsured Americans. First, state lawmakers need to either stop adding more and more procedural requirements onto basic health-care plans before they can be legally sold or give insurers the option of selling less costly essential-benefits plans. The second dynamic is SBHPs. It’s unfair that Congress gives big businesses an out in complying with thousands of state mandates through the Employee Retirement Income Security Act of 1974 (ERISA), but denies that advantage and the advantage of banding together to small businesses.
What will do more harm than good are proposals such as San Francisco Senator Carole Migden’s Senate Bill 1414. It’s the beginning of Canadian-style socialized medicine, and proponents of it should be honest about it. This camel’s nose needs to be sharply smacked and sent retreating.
Martyn B. Hopper is California state director for the National Federation of Independent Business.
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