Health-care realities

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Small-business people tend to have a very firm grip on financial reality. Perhaps that's why small business is America's engine of job creation, accounting for 60 to 80 percent of new jobs over the last 10 years. Small businesses have built that track record by judiciously investing in their future without spending more than they can afford.

It's therefore not surprising that small-business owners across the country came away from the final presidential campaign debate worried that the small-business job growth engine could be stalled with expensive regulatory mandates and taxes from the Kerry-Edwards health-care plan.

Financially, the Kerry-Edwards plan is a disaster. The Kerry campaign initially estimated the plan's cost at about $1 trillion over 10 years. Now they have -- incredibly -- backtracked to $653 billion. But independent assessments by former Medicare and Congressional Budget Office economist Joe Antos and by John Shiels of the respected Lewin Group price the Kerry plan at $1.5 trillion and $1.25 trillion, respectively.

Even if by some miracle a Kerry administration could keep the cost to $653 billion, the stark reality is that there will be no money to pay for it; certainly not if John Kerry were to proceed with his reality-challenged plan to raise the needed money by canceling those infamous tax cuts for "the rich" while leaving middle-class taxpayers alone.

Mr. Kerry is tilting at financial windmills when he says his plan could be financed by boosting taxes solely on people making $200,000 or more a year. There simply aren't enough of them to tax. Moreover, Mr. Kerry promises to restore the top two tax brackets to their Clinton administration-era levels, but those brackets reached to incomes well under $200,000. The middle class should be very wary of Mr. Kerry's tax plan.

Even if the $200,000 threshold could be believed, the "very rich" whom Kerry thinks should pay more taxes include hundreds of thousands of small businesses which pay taxes at the personal rate. The finances behind the Kerry-Edwards plan would penalize the very same small employers that Mr. Kerry says he wants to help buy health insurance for their employees.

That's the conclusion of a just-released study of the Kerry-Edwards plan commissioned by a group of national associations representing over 1 million small employers. Conducted by the Center for Regulatory Effectiveness, a public-policy think tank in Washington, the study concluded that the Kerry plan would saddle participating businesses with at least 225 regulatory mandates.

The Kerry plan would require employers to cover part-time, seasonal, temporary and contract workers; adopt complicated "disease management and care" programscompletewith newsletters and videos; and offer free preventative health-screening facilities on site. Business would be told who they must cover, what kind of coverage they must provide, how to educate their employees about health issues, what records they must keep and what reports they must file. The list is endless -- and frightening. The Kerry plan mandates would impose an additional cost burden on small businesses that is certain to force many of them to stop offering coverage.

Mr. Bush's plan is more practical. It will actually help small businesses help their employees buy health insurance. The president supports tax-free individual health savings accounts and association health plans that let small businesses band together to negotiate better deals for employee health insurance.

The Bush plan is also based on reality. It would cost the U.S. Treasury an estimated $128.6 billion over 10 years, compared to $653 billion or $1.25 trillion or $1.5 trillion for the Kerry-Edwards plan.

Spending money you don't have for benefits you can't deliver would be a recipe for disaster for small business -- and even for very big government.

Dirk Van Dongen is president of the National Association of Wholesaler-Distributors.