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Healthcare Reform Could Provide Estimated $855 Billion in Small Business Savings

healthcare-biz.jpgComprehensive healthcare reform will save the small business sector $855 billion over the next 10 years, according to a report released this morning by the nonpartisan Small Business Majority. The study, titled The Economic Impact of Healthcare Reform on Small Business*, noted that a system of shared responsibility among the healthcare industry, businesses, government and individuals would be critical to successful reform.

The data revealed the following:

  • On costs: Without reform, small businesses will pay nearly $2.4 trillion dollars in employee healthcare costs; with change, costs could be reduced up to $855 billion (36 percent).
  • On jobs: In 2018, an estimated 178,000 small business jobs will be lost as a result of unchecked healthcare costs. Depending on the level of support, 128,000 (78 percent) of those jobs could be preserved. 
  • On wages: Small business employees will see $12 billion in total wages lost to growing healthcare costs in 2009; by 2018, that number could reach $172 billion. Reform can preserve $309 billion (63 percent) of these lost wages.
  • On profits: Over the next decade, small businesses will lose $52.1 billion in profits due to high healthcare costs. A reformed system will reduce those losses by $29.2 billion (more than 56 percent).


In a follow-up conversation with Small Business Majority CEO John Arensmeyer, I asked him to explain what entrepreneurs should take away from the report, and what they should do to ensure reform happens.

"Not enacting healthcare reform is going to be an unmitigated disaster," he responded, "but implementing a system based on the framework Congress is working on right now--even with the [controversial] mandates for employee coverage--will be a tremendous benefit to small business. Even the most conservative versions of reform will produce better results."

Arensmeyer stressed that business owners should express their views about healthcare reform to their elected representatives. "There are a million moving parts to try to fix a seriously broken $2.4 trillion system. That doesn't happen overnight, or easily, without discussion and some disagreement along the way," he said.

He finished with the good news. "On the positive side of the ledger, everyone wants change and is approaching this with good will and the desire to do the right thing." He added that, so far, Congress is on schedule to draft the final legislation after the August recess. "I think there's a very good chance we're going to get legislation before the end of the year. There's a momentum building."
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*The report's analysis was led by Jonathan Gruber, economics professor at the Massachusetts Institute of Technology, who applied a healthcare simulation model to compare three different reform scenarios--limited, expanded and significant support for small business owners. Gruber's team looked at reform packages with varying amounts of tax credits for employers who offer insurance, and different payment levels for those who don't.

Jennifer Wang is a staff writer at Entrepreneur magazine in Southern California.
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