In rejecting real health-care reform, businesses don’t know what’s good for them

The system sucks! Save the system!

That, in six words, pretty much sums up what Chamber of Commerce types are contributing to the health-care debate.

I'm exaggerating but only a little. Curious about what seemed like an odd silence coming from those who have high stakes in the debate — business owners who often pay for their employees' health care — I started asking what the deal was.

In a recent policy letter, the Greater Kansas City Chamber of Commerce announced its opposition to a government-sponsored insurance plan. Chamber leaders fear that a "public option" could lead to a single-payer system, which is, you know, socialism.

At the same time, the Chamber's members complain about the burden of insuring their workers. According to a survey conducted in May, 72 percent of small-business owners in Missouri say they are "really struggling" to afford health care. 

Change! Status quo!

"That is the ultimate problem with health-care reform," says Robert E. Litan, a vice president for research and policy at the Kauffman Foundation. "Pretty much everyone's for it in the abstract. But when you get down to the details of how you're going to pay for it and actually making it run, then people's oxes are gored, and that's where the agreements start to dissolve."

Kansas City's most celebrated businessman, the late Ewing Marion Kauffman, established his foundation in the mid-1960s. One of its main objectives is to sup-port education; the other is to advance entrepreneurship.

In 2007, the foundation issued a report with ideas on how to help people be more successful when starting new businesses.

No. 1 on the list: Make sure the workforce is skilled.

No. 2: Reform health care.

What's cool about the Kauffman Foundation report isn't that it says health care needs attention (like, duh). Rather, it's the clear language used to explain why the current system is so dreadful.

"There is very little that can be said to defend this system," according to the report, called "On the Road to an Entrepreneurial Society."

For people who want to start their own businesses, health care poses two big challenges.

First, they potentially have to get up the nerve to leave an employer who provides health care. This is a queasy step, even for people who are healthy. But for someone who's diabetic or has epilepsy, for example, leaving the cubicle farm may seem impossible.

The term for this phenomenon is "job lock." And it's worth noting that entrepreneurs are not just college dropouts fooling around with computer boards in garages. Litan says the typical successful entrepreneur is 40 years old.

"Well, guess what? That's the point in life when you start to have pre-existing conditions," Litan says. "We've got to solve that problem if we're going to have those future 40-year-olds go out and start companies."

Entrepreneurs with the courage to leave their employers face another hardship: providing health care for the workforce they hope to employ.

The smaller the company, the harder it is to get a good price on group health insurance. A small business pays up to 18 percent more to insure a worker than a large firm does.

Some business owners attack the problem creatively. Matthew Condon is the CEO of the Athletic & Rehabilitation Center , a provider of physical therapy and other services. He has several locations throughout the metro. Condon's insurance provider recently notified him of a rate increase. Annoyed, Condon put together some information about the wellness program that ARC offers its employees. Condon wanted to show his insurer that his people were good risks and the rate hike was unjustified.

Eventually, Condon got a $27,000 break on ARC's health insurance. "Money I save in insurance premiums goes back to the staff," he tells me.

Of course, not every employer is as innovative as Condon or as well-equipped to administer a wellness program. (Condon says his clinics are like "little Ballys.") As a result, fewer and fewer small companies are offering health insurance. Today, only about half the businesses with fewer than 10 employees offer insurance.

The Kauffman Foundation says policymakers should begin to "untether health-care insurance from employment."

Litan says, "We're the first to say that the current system is actually discouraging entrepreneurship. The current system is not satisfactory."

Litan puts it too nicely. The current system is nuts.

It evolved by accident. Employers started to offer more generous health benefits during World War II, when wage controls were in place. It was a fringe benefit, like a country club membership.

But that approach has not served us very well. We spend more and die sooner than people in other developed countries. An estimated 46 million Americans have no insurance at all.

Business owners don't necessarily speak with one voice. Someone who runs a coffee shop or a small ad agency may favor a Canadian system of health insurance, but MRI centers and insurance companies, not so much. But, in general, corporate America has an ideological bias against government solutions — even if the solution is in corporate America's best interest. General Motors offers an example.

In 1947, President Harry Truman proposed a system of national health insurance. GM officials reacted negatively, seeing socialized medicine as a threat to the free market. Sixty years later, though, the cost of providing gold-plated health benefits to GM workers contributed to the company's demise.