American Forum Op-Ed

AMERICAN FORUM

By Frank Knapp, Jr.

Economic reports show that most job growth in our country this year has come from small- and medium-size businesses. That trend will only accelerate, according to the recently released Small Business Index from the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business.

Nearly 3.8 million new jobs will be created by small businesses with fewer than 100 employees in 2011, says the report. That will be enough alone to lower the U.S. unemployment rate by 2.4 percent. The survey, conducted in January, also found that only 2 percent of small businesses planned to lay off workers.

Major health insurance companies nationwide are reporting dramatic increases in small businesses offering health insurance to employees. This reverses a trend for small businesses dropping insurance because of affordability.

This is not what opponents of health-care reform told us would happen if Congress passed the Affordable Care Act (ACA). They warned us strenuously before the ACA became law March 23 of last year that small businesses would not only stop hiring out of fear of the future but would begin laying off workers because of anticipated new taxes, fees and health-insurance mandates under the ACA. Small businesses also were supposed to start dropping health insurance because the ACA would drive up premiums. These dire predictions continued right up until last year’s November elections.

Fortunately, the gloom and doomers were wrong. Those of us who supported the ACA have tried valiantly to put out more realistic predictions about how the ACA was going to help small businesses. There will not be new taxes, fees or health-insurance mandates for small businesses with 50 or fewer employees (approximately 96 percent of all businesses). However, most of the mainstream media preferred to report on the negative tea-reading.

But now the good news for small business is rolling in and the positive future effect of the now 1-year-old ACA is becoming clear.

More than four million U.S. small businesses with fewer than 25 employees are eligible to receive health-insurance tax credits under the ACA. That’s 87.3 percent of all small businesses in the country that the ACA can help by making health insurance more affordable.

As for the ACA dramatically increasing the cost of health insurance, a senior vice president at Harvard Pilgrim says that the federal law has only increased premiums by 1 percent.

The ACA is helping small-business owners who have been locked out of health insurance because of their own pre-existing condition. Right now, these entrepreneurs are eligible for affordable coverage from new high-risk pools established under the ACA.

This year, the ACA is requiring that at least 80 percent of every premium dollar being paid in small group health insurance plans is actually paying for medical costs -- not marketing, CEO salaries or profit. If not, the policyholder is owed a refund.

These benefits for small business are in place now.

Today, small businesses are paying as much as 18 percent higher premiums than big businesses. This is a result of higher administration costs for small groups. In 2014, this extra cost is eliminated, so small-business employees, along with individuals, will be able to purchase their coverage from the new health insurance exchanges in each state.

A small business with only one employee with a pre-existing condition finds itself priced out of the market or paying highly inflated premiums. In 2014, health insurance companies will no longer be allowed to charge higher rates because of pre-existing conditions.

And because no one will be denied health insurance because of a pre-existing condition, aspiring entrepreneurs will no longer be locked into a job because of health-insurance benefits. As a result, ranks of small businesses should expand.

The one year anniversary of the ACA is truly something small businesses should celebrate for what it has already done. The future will be even better.
-----------------------------------------------------------------------
Knapp is president and CEO of The South Carolina Small Business Chamber of Commerce and serves on the steering committee for the American Sustainable Business Council.
-----------------------------------------------------------------------
Copyright (C) 2011 by American Forum. 3/11

By Greg LeRoy

Aside from health-care reform, probably the most divisive issue in Washington today is the $787 billion economic stimulus program.

One camp argues that the Recovery Act has done a good job in preventing the country from plunging into a more serious crisis than the one we’ve got, while another camp says the whole effort has had little effect and was an expensive mistake. We suspect the former conclusion is correct, but would like better evidence.

Most arguments are based on differing assessments of the first round of jobs data released in October. The Recovery Act’s exemplary transparency provisions cover direct federal contracts and some of the grants to states—a limited part of the overall stimulus program. They counted about 640,000 jobs created or saved so far.

There’s been much media attention given to instances in which job numbers seem to have been seriously exaggerated. Yet, there also are cases in which they were apparently understated. More than 2,000 contract and grant recipients report that their stimulus projects are more than 50 percent complete—yet they claim not to have created or saved a single job.

Clearly, there is confusion about the right way to report stimulus-related jobs. This is not surprising, given that tens of thousands of companies, government agencies and nonprofits are being asked to do this for the first time.

But the blame is not entirely with recipients. Instructions given by the Office of Management and Budget (OMB) did not adequately consider the variety of situations reporting entities would face. For example, exactly how does an employer determine which existing workers put on stimulus projects should be counted in computing the number of saved jobs?

Should they include only those who were about to be laid off before Recovery Act money was received—or should they also include those who might have been let go at some later point in the absence of those funds?

The furor over the quantity of stimulus-related jobs has obscured the question of their quality. Despite efforts of the Coalition for an Accountable Recovery (CAR) and others, the OMB decided not to collect data on wages, benefits or the number of full-time vs. part-time positions. Without this information, we cannot tell to what extent the Recovery Act is generating jobs that allow workers to support their families in a decent fashion.

Nor can we tell who is getting Recovery Act jobs. CAR also argued strongly for collection of data on the demographic characteristics and residential area of workers on stimulus projects. With information on factors such as race, gender and neighborhood of residence, taxpayers would be able to determine whether all communities are getting a fair share of Recovery Act employment.

The Recovery Act is a many-sided law meant to lessen what has turned out to be a more serious economic downturn than anyone expected. In the same way it may need to be adjusted because of the magnitude of the crisis, so must its reporting and transparency provisions be refined to reveal how well it is working and who it is serving.
----------------------------------------------------------------------
LeRoy is executive director of Good Jobs First, a nonprofit resource center on economic development accountability that is co-chairing the Coalition for an Accountable Recovery.
----------------------------------------------------------------------
Copyright (C) 2009 by the American Forum. 12/09