When does Washington consider a successful small business a problem to be dealt with? When that small business successfully competes against unionized firms. Then it needs to be tied down with expensive red tape until it is no longer so successful.
Say what? Members of Congress routinely extol the praises of small businesses as the engine of job creation – especially in these difficult economic times. This is standard practice on Capitol Hill – small businesses do not have the same resources as large ones, and they often cannot afford to comply with federal mandates. Rather than put them out of business Congress exempts them from expensive regulations.
The Senate health care bill also gives small businesses an out. The bill fines businesses $750 for each employee if the company does not provide more expensive “qualifying” health coverage to all their workers. However, companies with less than 50 workers do not have to pay this fine.
Or at least, that was how the bill was written. A small provision slipped into the bill at the last minute changes that threshold for the construction industry. Now any construction company with five or more workers would have to pay the fine. With a few paragraphs in a 2,074 page bill the Senate gutted the small business exemption for construction companies.
Construction workers have born the brunt of the recession with the collapse of the housing bubble, accounting for 1.5 of the 7 million jobs lost since December 2007. Now the health care bill forces a heavy regulatory burden on small construction business.
Why would the Senate kick small construction contractors when they are down?
Special interests, why else? Construction unions hate the competition from small, mostly nonunion contractors.
The health care bill will make providing “qualifying” healthcare coverage significantly more expensive. It forbids lifetime limits on coverage and requires insurers to cover children on their parent’s plans until they are 25. Unions estimate these provisions will raise the cost of health coverage by an additional $1,000 a year.
They do not want the law to allow small businesses to provide less generous health benefits and then underbid them for construction jobs. They want small business to work with the same expensive regulations and taxes they do.
Of course, these regulations and taxes burden small businesses more heavily because they have less money to pay for them. Instead of getting more generous benefits many workers at small construction companies will lose both their jobs and their health benefits.
That that fact did not stop the union movement should not surprise anyone. Unions are cartels – they attempt to raise their members’ earnings by restricting competition. Unions can only win above-market wages when they can prevent nonunion workers from competing against them for jobs. By using the law to shackle their small business competitors the union movement can prevent them from winning bids for projects. That is great for unions – but not for the small business employees.
Normally Congress would stand up for small business employees. But the labor movement is no ordinary special interest. Unions spent hundreds of millions of dollars to elect Obama and the current liberal Congress. So when construction unions asked the Senate to kneecap their small competitors, Majority Leader Reid was happy to comply.
The Washington Post and New York Times both have front page stories out today on Sen. Kent Conrad’s (D-ND) co-op fall back for President Barack Obama’s imperiled public plan. The NYT reports: “The history of health insurance in the United States is full of largely unsuccessful efforts to introduce new models of insurance that would lower costs. And the health insurance markets of many states suggest that any new entrant would face many difficulties in getting established.” WaPo reads: “There are at least two major health-care organizations that could serve as models for Congress: HealthPartners in Minnesota and Group Health Cooperative, based in Seattle. They employ physicians and own health-care facilities, giving them greater power to control the delivery of care.”
HealthPartners and Group Health Cooperative are both high quality integrated health systems much like Intermountain Health in Colorado and Mayo Clinic in Minnesota, which have both been praised by President Barack Obama. These are all wonderful health care systems which can serve as models to other providers. But the reason they are so hard to replicate is not because of too little government intervention, but because of too much.
Like all health providers today, these entities are all subject to the perverse tax incentives and regulations that blunt all innovative systems. Each are subject to state (and federal) mandates that push up costs and a federal tax code that forces them to be primarily employer based plans. Real health care reform would mean restructuring the tax code to decouple health insurance and employment and encouraging states to drop costly mandates that drive up health insurance costs for everyone. Once freed from cookie-cutter federal and state regulations, Americans would be much more likely to see new enterprises like HealthPartners, Group Health, Intermountain, and Mayo, be established, expand, and flourish.