Small businesses wary of health care legislation
Workers at small firms could be more vulnerable to losing health care benefits.
WASHINGTON -- Like many small business owners, Pedro Alfonso struggles to maintain the health insurance he provides to his 85 employees — an effort he says is worth it partly because "it's the right thing to do."
But rising costs and a weak economy have left workers at Alfonso's Washington telecommunications firm, Dynamic Concepts Inc., with higher out-of-pocket health costs. The company once paid 70% of health insurance premiums but now, he said, it can afford only half.
"This is the one cost we can't control," Alfonso, 61, said of health benefits. "It's a hardship on employees. It's hard on us."
Small companies paying lower wages such as Alfonso's are exactly what the non-partisan Congressional Budget Office (CBO) had in mind this month when it estimated as many as 15 million people could lose the benefits they currently receive through their jobs under a Democratic proposal to overhaul health care.
The estimates were based on an incomplete draft of a bill in the Senate Health, Education, Labor and Pensions Committee, but they touched off a broader debate about who might lose health benefits received through their company. Workers at small firms could be more vulnerable, especially if they pay high premiums.
"The health insurance system doesn't really work well for small employers," said Greg D'Angelo, a policy analyst at the Heritage Foundation, who said the number of people who lose insurance will depend on factors lawmakers are still negotiating.
According to the Congressional Budget Office estimates:
• As many as 10 million lower-wage workers would choose to drop their employer-provided insurance because, with proposed government subsidies, it could be cheaper to buy insurance on the open market, especially if they are paying high premiums now.
• Partly because of that exodus, some companies could find it no longer cost effective to offer insurance to the remaining employees, dragging another 10 million people into the open market. If half of a company's employees voluntarily dropped insurance coverage provided by their job, for instance, some businesses might decide the cost of insuring the remaining employees isn't worth it.
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