Tuesday, July 7, 2009

Government Health Care Limiting Job Growth and Economic Recovery

Some obvious things that everyone knows..... we are in a recession, and the economy has shed millions upon millions of jobs over the past year and a half. Stemming from these problems is one glaringly obvious solution: give employers and entrepreneurs incentives to create more jobs. More jobs equals more paychecks for people. More paychecks for people equals spending and economic growth. In the end it means an end to this recession.

The concept of job growth is painfully simple, but our government does not seem to get it. In fact, Congress is considering legislation right now that will decrease job growth. How, you ask? One idea (among many job killing bills) that is currently being floated in Congress is to require employers to provide health insurance to their employees. Not only will they mandate health insurance, they will mandate a specific type of health insurance, one that covers waaaaaaay more medical issues than most people need or want. If they choose not to provide this specific type of health insurance then they will be forced to pay a penalty to support the public health "option." One extremely large group of people in this country is very upset about this potential mandate, because it would crush their businesses. This group of people is comprised entirely of small business owners. Small business owners are the largest group of employers in the country. Congress knows their concerns, and they are talking about exempting small businesses from the mandate. Problem solved, right?

Absolutely not and here's why. How will the government define "small business"? Simple. They will use employee head count. Let's just say it's 20 employees. So, if a business has 20 or more employees it will be required to provide health insurance to all employees. Those with 19 or less will be exempt. According to the latest U.S. Census data available, 89% of the businesses in the United States have less than 20 employees and employ almost one fifth of the workforce. Now let's say this health care thing passes and you're a business owner with 18 or 19 employees. You already provide health insurance to your employees, and they're happy with it. You want to grow your business, but growth means hiring more people. If you hire more people then you'll incur the added expense of providing the government mandated health insurance to your employees. This added expense would actually make your business less profitable, maybe even unprofitable, even though you are trying to "grow" it by adding more employees. So instead of adding more employees, which would help our economic recovery, you decide to keep your business the same size.

If job growth is so essential to our economic recovery (which it is) then why is the government working against it? In addition to stymieing recovery, exempting small businesses won't do much to reduce the number of uninsured. A recent Wall Street Journal article points out that most large employers already provide health insurance to their employees. Regardless of this fact, though, this is our government's solution to the health care problem. Their "solution" makes zero sense, and it simply won't work. Stay tuned over the next week or two for some Real Honest Solutions on health care issues.

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