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Business Owners Don’t Understand Health Care Reform

Small-business owners may not be entirely enthusiastic about health care reform. And that, according to new research, is because they don’t completely understand it.

Business owners, as well as the rest of the American population, are in the dark about what health care reform will actually mean, according to Joel Rudin, a professor in the management and entrepreneurship department in the Rohrer College of Business at Rowan University, in Glassboro, N.J.

The blame for the lack of understanding lies squarely on the shoulders of lawmakers, Rudin said.

“My health insurance is unlikely to improve thanks to health care reform. Why? Because my health insurance is already really good, and if I am ever dissatisfied with it, then once a year I can switch over to another really good health insurance plan. Why is my health insurance so good? Is it because I earned it by committing a feat of bravery? No, it's because I work for the state of New Jersey. So many employees work for the state of New Jersey that it's worthwhile for health insurance companies to compete against each other for our business, which means that we get lower rates and better service than if we worked for Fred's Garage with 20 employees,” Rudin said.

Rudin said health care reform will create a similar dynamic for small employers.

“Under health care reform, most Americans will have health insurance that is similar to my health insurance, but that won't happen until 2014. By then, the people who came up with this idea may have been voted out of office. If that happens, it will be their own fault for failing to explain to the American people how much better and cheaper their health insurance will be.”

Rudin predicts that when health care reform kicks in:

  • Most Americans will have better and cheaper health care in 2014 than they have now, while few if any Americans will have worse or more expensive health care in 2014 than they have now;
  • Businesses with fewer than 50 employees will have a much easier time recruiting and retaining employees starting in 2014 because they will be able to offer better insurance;
  • It's good that every American will have to sign up for health insurance or pay a fine, as health care reform would otherwise collapse;
  • The nonpartisan Congressional Budget Office estimates that health care reform will pay for itself and even generate a surplus for the government.

Not all small businesses or business organizations agree with Rudin.

The National Federation of Independent Businesses, for example, is encouraging its members to “Urge Congress to Repeal Job-Killing Health Care Law” on its website’s home page, while the National Small Business Association is playing it down the middle, attacking perhaps the most universally detested aspects of health care reform, the 1099 reporting law.

One small business group, the Small Business Majority, a Sausalito, Calif.-based organization, bills itself as a small business advocacy group that uses scientific research to back its positions. The group recently released a study by MIT professor and economist Jonathan Gruber to project the effects of three different health care reform scenarios on small business profits, jobs and wages. The analysis found that compared with no reform, the scenarios would dramatically improve the overall situation for small businesses—holding down health care cost increases, saving jobs and preserving wages, the organization’s website said.

The survey’s key findings included:

  • One-third (33 percent) of employers who don’t offer health insurance said they would be more likely to do so because of the tax credits offered to small business through health care reform.
  • 31 percent of respondents — including 40 percent of businesses with three to nine employees — who currently offer insurance said the tax credits will make them more likely to continue providing insurance.
  • One-third (33 percent) of respondents who currently do not offer insurance said the exchange would make them more likely to do so.
  • The same is true for those businesses who already offer insurance, with 31 percent responding that the exchange would make them more likely to do so.

The Small Business Majority recently released a survey that found that the majority of small business owners do not understand health insurance reform .

Most respondents to the organization’s November survey of 619 small-business owners were not familiar with the exchange or the tax credits, with only 31 percent of respondents saying they understand what the exchanges will do and 43 percent saying they are familiar with the tax credits.