Small businesses turn against health plan

Over the course of two years, the annual health insurance premiums at David White’s auto shop in Bar Harbor, Maine, more than doubled from $23,000 to $47,000.

“It was platinum coverage,” he said of the insurance plan, which covered himself, three employees and their families. “I was happy to do it.”

The rising costs eventually proved too much to handle, and he canceled the plan. Now he’s hoping that a health care reform plan in Congress will allow him and his employees to enroll in a proposed government-run program.

Mr. White is exactly the kind of small-business owner that Democratic leaders had hoped would support their reform proposals. But the largest lobbying group for small-business owners says the health care bills in Congress would hurt the David Whites of the world and, in a major blow to President Obama and his allies, is complaining publicly about the plans’ most important components.

The National Federation of Independent Business (NFIB) says small-business owners should worry about the bills’ requirement that employers provide health insurance, and about higher taxes on the wealthy to pay for the proposed benefits.

NFIB, a powerful lobbying group and a traditional friend to conservative causes, also says the House reform bills wouldn’t be effective in decreasing insurance costs.

The White House has vigorously courted small-business lobbying groups on the health care issue, hoping to divide the business community. The U.S. Chamber of Commerce and other organizations that represent larger businesses are opposing the president’s health care drive.

But the Obama administration had high hopes of bringing small-business lobbyists into its camp. Christina Romer, chairwoman of the White House Council of Economic Advisers, hosted a question-and-answer session for small-business owners through the networking site LinkedIn on July 29. NFIB made pro-health-care-reform noises for months, encouraging speculation that it might jump aboard the Democrats’ legislative campaign.

But those hopes have been dashed. NFIB, which claims 350,000 members, has opposed the major health care reform bills in the House.

An alternative, small-business lobbying group has formed to back Mr. Obama’s reform efforts. The Main Street Alliance was organized in 2008 as an alternative to NFIB and the U.S. Chamber of Commerce. Made up of state chapters, the alliance supports the Democrats’ reform proposals. Mr. White is a member.

Provisions in the House plans would mandate all employers with payrolls exceeding $500,000 a year to provide insurance to their employees. That figure was originally $250,000 but increased as part of a deal to win support from conservative Blue Dog Democrats. Employers that don’t provide insurance would be fined up to 8 percent of their total payroll costs.

The bills also would cut Medicare and Medicaid funding, as well as levy a tax on the wealthiest Americans, starting with individuals who make more than $280,000 a year or couples with a combined annual income of more than $350,000. Small-business owners, some of whom list their business earnings on their personal income tax forms, have expressed concern that they would get hit with a tax increase.

In the Senate, the Finance Committee is not expected to include an employer mandate, but its health care bill will have incentives to provide insurance, lawmakers say.