Health Insurance: #1 Challenge to Small Business Owners

“What is the most important challenge facing your business today?” asked a recent survey from the Governor’s Office.

The answer? Health insurance. Tied in first place with “decreased demand.”

The survey was conducted as part of the Governor’s efforts to review regulation on business and is reported in the “Wisconsin Regulatory Review Report, 2013”.

Almost 600 business owners responded to the survey. Almost 80% were business owners of a company with 25 or fewer employees. According to the report, 86% of Wisconsin businesses employ fewer than 20 employees.  There are over 100,000 establishments of this size in the state.

It’s not a surprise that health insurance tops the list of challenges to small business. Health insurance has been on the top of the list for many years. What is surprising, is that the leaders of our state, who seek to make Wisconsin a great state for business, seem deaf to the number one concern of small business – the greatest source of job creation in our state.

Other states are moving rapidly to assist small business in finding affordable health insurance. Utah and Massachusetts are ahead of the pack. Seventeen other states have declared their intentions to create a state based exchange including Minnesota. Another seven are planning partnerships to create a state-based exchange.

Wanting to attract small businesses to the exchange, Minnesota officials are working hard to craft an exchange that lowers cost and makes transparent the details of health insurance. Our neighboring state is also working hard to create report cards on doctors and hospitals to help business owners make wise purchasing decisions.

“It’s about finding a way to encourage plans to be more competitive on things that matter,” April Todd Malmlov, director of the Minnesota health exchange told the Star Tribune. Things like quality, affordability, customer service and improvements in health can all help drive down costs or create a better health insurance product.

According to the Star Tribune, Minnesota has spent more than a year developing guidelines for the exchange. Legislators are rushing to pass bills creating the exchange. Governor Dayton has used nearly $110 million in federal grants to create the framework for the new exchange.

Governor Walker, on the other hand, returned most of the $38 million allotted for Wisconsin back to the federal government and decided to let the federal government create the Wisconsin exchange.

The Governor said the exchange would cost too much for the state to operate ignoring the fact that federal law requires the state exchanges to be self-sufficient by 2015.

In private conversations with Wisconsin business owners, I hear over and over again the clear message that Wisconsin needs its own exchange.

Unlike many other states, Wisconsin has many insurance companies already offering plans; Wisconsin has relatively few uninsured; Wisconsin has many providers working with plans to lower costs and develop innovations in health delivery.

The exchange can lower costs to many small businesses by allowing the pooling of risk. As the risk pool increases, many small businesses would see lower costs.

Industry leaders fear a federal exchange would raise costs to Wisconsin businesses by including in the risk pool other states – like Texas or Louisiana that have very high numbers of uninsured.

If the Governor continues his present policy, the top concern of Wisconsin business owners will not be addressed.