Small business wields power in U.S. health debate

By Kim Dixon

WASHINGTON (Reuters) - The mom and pop businesses that make up the bulk of America's employers, key players in scuttling health reform during the Clinton years, say years of crushing costs have them backing major changes this time around.

The National Federation of Independent Business helped derail President Bill Clinton's effort to overhaul the health insurance system during the 1990s, with a massive direct mail and telephone campaign, and a blitz of lawmaker lobbying.

Now, small companies with an average of 10 workers are bearing the greatest burden of insurance premium increases, which have grown twice as fast as inflation for several years. They've started lobbying the presidential candidates early and are pushing for changes to taxes and state laws.

"The situation for small business is much worse than it was in 1994 in terms of cost," said Todd Stottlemyer, the group's president. "We can't just say 'no' today."

It is much cheaper per employee for large companies to provide health insurance, with more employees to balance risk and spread administrative costs.

And workers pay 18 percent more for premiums than their counterparts at larger firms, according to a study by the Commonwealth Fund, a nonprofit research group.

"The NFIB is starting to listen to its members," said Peter Harbage, a Democratic health strategist who has worked for former presidential candidate John Edwards. "The whole health-care system seems designed to work against small business."

These companies represent 80 percent of total U.S. employment. The influence lies in these hard numbers, but also their ubiquitousness in grass-roots politics.

"These are the business people that go to the Rotary Club lunches their congressman speaks at," said Robert Laszewski, president of Health Policy and Strategy Associates, a consulting firm. "They have the numbers, and the personal relationships with the congressmen."

The group launched its multimillion-dollar campaign earlier this month, including letters to the candidates and town hall meetings with members nationwide.

Polls among its members have found one in three small-business owners say their No. 1 voting issue in the 2008 presidential election will be fixing health care.

EARLY INFLUENCE

And they've already influenced the debate.

Democratic presidential hopeful Senator Hillary Clinton of New York, who led the overhaul effort for Bill Clinton, makes an exception for small businesses in her proposal to require employers to provide insurance or pay into a fund that does.

That is a direct result of NFIB's opposition to her earlier efforts, experts said.