Health care reform that requires employers to provide health care coverage for workers or pay into a fund—known as pay or play—could save small businesses as much as $855 billion during the next few years.

A new study by the Small Business Majority disproves claims by health care reform opponents that requiring businesses to provide coverage to their workers would destroy their bottom line.

The Economic Impact of Health Care reform on Small Business, written by Massachusetts Institute of Technology economics professor Jonathan Gruber, says that small businesses, more than any other sector of the economy, “suffer from our broken health care system.”

From spiraling premiums to inadequate access to health care for themselves and their employees, small business owners have seen their prospects for growth diminished and their profits slashed by today’s patchwork of inefficient health care options.

The report looks at three health care reform proposals—including President Obama’s—that call for pay or play by businesses, along with tax credits and other incentives to help offset the cost of providing health insurance to their workers.

This analysis demonstrates that the type of health care reform that is emerging from today’s debate will save small businesses hundreds of billions of dollars, protect small business wages and jobs—and allow small businesses to reinvest and grow.

Without reform, small business owners will pay nearly $2.4 trillion in health care costs for their workers over the next 10 years. But as the report points out, reform as outlined under the three plans,

could save as much as $855 billion with reform—a 36 percent reduction, money that can be reinvested to grow the economy.

Soaring health care costs are projected to cost some 178,000 small business jobs over the next decade, but health care reform, could reduce projected job loss by 72 percent job loss.

To benefit small businesses, their workers and the economy, the Small Business Majority report says that health care reform must:

• Substantially contain costs.
• Guarantee access to coverage regardless of health status.
• Be based on shared responsibility among individuals, businesses, the government and the health care industry.
• Provide appropriate assistance to small businesses to meet their health care obligations.

The Small Business Majority, founded in 2005 by executives of small companies who wanted to broaden the small-business discussion about health reform, isn’t the only small business group to back comprehensive health reform.

In January, the Main Street Alliance network of state-based small business health care coalitions, surveyed 1,200 small business owners and found they

• Are concerned deeply about the adequacy of insurance, including the breadth and affordability of services covered by their plans.
• Believe government should provide a public alternative to private coverage.
• Want increased oversight of private insurers.
• Are willing to contribute their fair share toward a system that makes health care work for small businesses, their employees and the communities they serve.

About the Author: Mike Hall is a former West Virginia newspaper reporter, staff writer for the United Mine Workers Journal and managing editor of the Seafarers Log. He came to the AFL-CIO in 1989 and has written for several federation publications, focusing on legislation and politics, especially grassroots mobilization and workplace safety. He carried union cards from the Oil, Chemical and Atomic Workers, American Flint Glass Workers and Teamsters for jobs in a chemical plant, a mining equipment manufacturing plant and a warehouse. He’s also worked as roadie for a small-time country-rock band, sold blood plasma, and played an occasional game of poker to help pay the rent. You may have seen him at one of several hundred Grateful Dead shows. He was the one with longhair and the tie-dye. Still has the shirts, lost the hair.