Q: What's the deal with the Obama healthcare plan?  Should small business support it? -- Valerie

A: Small business may have more at stake in this healthcare debate than any other constituency. Consider: According to a report by the U.S. Public Interest Research Group, roughly 46 million Americans are without health insurance, and of those, more than half, 26 million, are small business owners, employees, and their dependents.

Why is that?

Of course you and I know the answer - cost. But even so, it was a bit surprising at just how much of a burden healthcare is for American small business; a new study from the White House Council of Economic Advisers found that small business pays as much as 18% more for health insurance than large companies. And that is why these next statistics fall into the "not surprising whatsoever" category:

• Fewer than half of small of all small businesses with three to nine employees even offer healthcare insurance to their employees, while

• 99% of large companies with 200 workers or more do

So President Obama hit the nail on the head when he said recently that small businesses "are getting crushed by skyrocketing healthcare costs."

No kidding. The real question is what to do about it.

Now, I am no healthcare policy wonk, but you don't have to be one to understand a few things that make intuitive sense.

The first is, the so-called "public option" seems like a good idea. As business owners, we understand competition. We know that it makes us sharper and often drives down prices. As such, that would seem to be one of the greatest benefits of an affordable public healthcare insurance option; competition would make the entire system more efficient and affordable.

The contrarian opinion that a public option is either unaffordable or will drive out private healthcare insurers is a bugaboo that does not carry weight when examined closely. As Josh Greenman noted in the NY Daily News last month, there are government / public options that compete with private options in plenty of sectors of the economy, and not only do they work, but they often make the entire system better.

• Example: Shipping. The "public option" is the United State Postal Service, a fine and valuable service. The private option is FedEx, UPS, and the like. Here we see public and private competing head to head, both making the other more efficient.

• Or what about the public option in recreation? The federal government is the largest landowner in the country, its museums like the Smithsonian are world-class, and its national park system is a jewel. These compete just fine with plenty of private recreation facilities like Disneyland or Hawaiian resorts.

• Or what about retirement? Social Security is a great, if limited, public option, designed to augment your own private option.

So it is hard to see how offering a public healthcare option is any sort of "government takeover" of healthcare. That has not been the case above. And anyway, healthcare insurance companies have far too much money and power for that to ever happen. But give them some competition? A fine idea indeed.

Now, what about this so-called mandate requiring small business owners to provide health insurance or face a government fine? That is more troubling. Under the House measure, employers with payrolls of more than $400,000 a year will be required to provide health insurance or pay an 8% penalty. Businesses whose payroll falls between $250,000 and $400,000 a year would pay a lesser penalty. Businesses with fewer than $250,000 in payroll would be exempt. A Senate version would exempt employers with fewer than 25 employees , and the fine for bigger companies not complying would be $750 fine per employee per year.

Those are some scary numbers, especially in a recession. The administration says that insuring more people and providing a public option will bring the costs of insuring employees way down, thus making the mandate far more doable than it might otherwise look. Would it work? It better, because insuring people at today's costs verges on impossible and penalties are the last thing we need.

But what is clear is that something must be done. The present system is broken. Waiting, or keeping what we have now, are not viable options.

The time to fix the healthcare system is now. America's entrepreneurs are waiting.
 

Today's tip: SCORE.org says that in tough times like these, one creative financing option to consider is vendor financing:

"If you need financing for equipment or supplies, ask your suppliers first. They may be willing to work out an arrangement with you to keep you as a customer. If you haven't established vendor relationships, shop around. Your trade association may be able to point you to suppliers that offer financing. Keep in mind that a number of major suppliers [also] own financial companies that can help you."
 

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