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Study: Health reform a boon to small biz

Jim Giuliano
by Jim Giuliano
June 19, 2009
1 minute read
  • SHARE ON

business-news
Based on the results of a study, an MIT economist insists that Obama-style healthcare reform would give small and midsize businesses a big boost.
The economist, Jonathan Gruber, did the study for the Small Business Majority, a nonprofit healthcare advocacy group. The study was done against the backdrop of data indicating that small businesses in the United States at one time were major providers of health coverage: 67% offered coverage to employees in 1995, compared to 38% in 2008.
Here are the conclusions of the study — and apparent benefits for small businesses under healthcare reform:

  • Reduced costs. Small businesses would pay less to provide health insurance to their employees.
  • More jobs. The study concludes that if we stick with the current system, healthcare costs will cause a loss of  178,000 small-business jobs by 2018. Introducing reform would save about 120,000 of those jobs.
  • Better wages. The study cites exploding healthcare costs as causing cuts in wages at small businesses. With reform bringing these costs down, more money would be left to pay wages.
  • Better profits. Reform would bring down costs, thus increasing profits.
  • Better applicants. Workers who feel tied to their jobs because they fear not finding comparable benefits would be freed up to change jobs. Small businesses providing health care would have a greater talent pool from which to choose employees.

The study assumes three components of a  reform package, with variations:

  1. An obligation on some or all employers to contribute to employee coverage.
  2. Penalty payments for those that don’t.
  3. Tax credits for those that do.

Here’s the full study.

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