This morning’s column by the Sacramento Bee’s Dan Weintraub tells the impressive story of small businesses creating the heart and soul of the new California economy. The spirit of entrepreneurship and the desire to be your own boss is leading many workers to set up their own shops.
As Weintraub points out in the article, “firms of five employees or fewer now represent nearly 90 percent of all businesses in California” and these firms are growing at a rapid pace. Indeed even the smallest of firms, sole proprietorships increased by 24 percent from 2000 to 2005 to more than 2.5 million.
But along with this success story comes the question of how so many workers in small businesses deal with exploding health care costs? According to the National Conference of State Legislatures, only 47% of firms with three to nine employees offer health care insurance. Sole proprietors often skip health care as an expense they cannot handle.
A recent New York Times article examining the focus of health care issues on small business points out that nearly half of the uninsured people in the country work for themselves or for small business.
While many solutions to this dilemma are being debated around the country, I believe one essential fix is to permit small businesses to join insurance buying pools across state lines. This allows businesses to spread the costs and risks over a large work force.
Congress ignored an across-state-line insurance pool solution for some time but now there is movement toward this reasonable goal. A Senate bill, S.2795 by lead author Sen. Dick Durbin of Illinois, is a bipartisan effort. The house introduced a similar bill recently.
Fixing the health care insurance issue for small business will just increase the movement of more entrepreneurs and small business start-ups, which is a good thing for the California economy.