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An Opinionated Perspective on Custom Manufacturing in America

By Greg Williams - July 2009


Is Health Care Reform Healthy for Small Business?

If you own or manage a small business in this country the current health care reform legislation moving through Congress probably has your attention. After all, you’re going to be paying for a good chunk of the outcome if things continue along the path they are now on. If you are like me, that’s enough to make a person very nervous.

Manufactured wood products is an industry segment that has been hit particularly hard by the economic crisis in the last 18 months and recovery is only now starting to take hold for those businesses that have survived. The last thing we need is another obstacle to recovery in the form of mandated health care for employees, right?

Well, maybe and maybe not. There are two sides to this issue and it’s not all bad for our industry if health care reform is done correctly – but that’s still a big if at this point.

Employee health care is a real and growing problem for our industry, and it needs to be addressed. If you provide health care for your employees then you know that the costs and complexity of insurance are out of control. If you don’t provide employee health care then you still suffer related costs like higher workers compensation claims, decreased production due to untreated employee health issues and lower retention of quality workers.

There is also the issue of competing with foreign imports. Being able to compete on a global basis is becoming an issue that can impact even small shops in local markets. The National Association of Manufacturers has documented that manufacturing businesses in this country pay about 18% higher costs on average when compared to other countries in the world. Some estimates for parts of the manufacturing industry go as high as 30%. Costs related to employees are a major part of that inequity.

Fixing the health care system in this country could potentially be a real benefit to our industry, if real affordable health care is the result. What is currently being proposed falls short of that mark, in my opinion, and it’s up to us to understand the issues and keep the process moving.

Leaders in congress deserve credit for their efforts that are constructive, such as striving for a viable public option as leverage to bring meaningful reform to the private health insurance industry. But they must resist the temptation to rush this important process. Massive new programs seem to be the only option that are seriously being considered, but is that the best option?

Consider the multiple health care programs that the government already has in place. Even with all their faults Medicare, Medicaid and the V.A. health care system still provide more care per dollar of cost per patient than almost all private insurance companies. And according to all the studies on this, the majority of patients under these government programs are just as satisfied with the care provided as people with private insurance policies. Most of these government programs are in need of reforms and improvements anyway. Why not just fix these programs and expand coverage instead of creating new ones from scratch?  

Another question about the current reforms being proposed to fix health care is whether or not we will be able to afford the fix.

The funding strategies for current reforms are a major issue. In my view, what is currently being proposed just won’t work. How can new taxes and fees on small businesses, health insurance premiums and many parts of the health care industry possibly help to lower the cost of health care? Wouldn’t the best way to pay for health care reform and reduce costs be to target the things that injure us and make us unhealthy?

So called “sin taxes” on alcohol and tobacco are common. Why not expand upon that proven model to include taxes on foods high in fat, sugar and salt to pay for health care? What about a surcharge on speeding tickets and seat belt violations? Risk-based and unhealthy revenue sources are plentiful and would spread the burden widely over the economy while providing incentives for changing behavior that could ultimately reduce the cost of health care by reducing the need.

But the public option and funding issues are far from being the only provisions that need improvement.

Many problems with current health care reforms are rooted in the fact that input from doctors in private practice and small business owners, the business people who will be most impacted, has been minimal. Politicians, lawyers, insurance executives and lobbyists for special interest groups have dominated the development of the current legislation.

This has not only skewed this legislation to disproportionately  burden small businesses but it has also left gaping holes in the feasibility of current plans.

Serious reforms of predatory legal practices which feed off the health care industry are non-existent. Reforms that would reel in the one-sided policies and obscene profits of huge insurance and pharmaceutical companies are inadequate. Incentives to grow and support the type of care providers that will be required to meet the demands of the aging American populace are missing. In order for health care reform legislation to truly “reform” health care in this country, all these issues must still be addressed.

Another problem is the timing. Hospitals, clinics and doctors have been hit hard by the recession like other businesses, but recovery of the health care industry is tied much more closely to employment than Wall Street. Most of the time, a lost job means loss of health care insurance, or lack of ability for the patient to pay for care. The costs of charity care and unpaid fees for services that must be absorbed by health care providers are at all time highs. The unemployment crisis needs to be fixed before any heath care reform plan would have the best chance of succeeding.  

In talking with my doctor about health care reform, one of his main concerns is that if the government doesn’t take the time to get it right, fixing ill conceived regulations and problems with new layers of bureaucracy after the fact will be extremely difficult. If history is any indication, he’s got a valid concern.

Congress has taken some steps in the right direction, but in my opinion they have a long way to go. If they intend to stop now and make law with what they have, I believe the message from American small business owners and those of us in the wood products industry should be simply this:

Keep working. We need health care reform but what you have now is the wrong plan at the wrong time.

This issue is too important to all of us to let it be driven primarily by huge special interests and political ideology. Whether you agree with my views on this issue or not, your voice needs to be heard before the current legislation moves forward. The good news is that the ear of your Senator (or at least their staff) is as close as your computer keyboard. Below is a link that will put you in touch with your elected officials right now. There has never been better time for your views to make a difference.

http://www.senate.gov/general/contact_information/senators_cfm.cfm

Read the previous article on The Road: Cap and Trade: The Demise of Small Custom Manufacturing in the American Wood Products Industry.

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