Here Comes Trouble: Stories from My Life

"Outstanding…Moore Triumphs! Publishers Weekly

Mike & Friends Blog

Wendell Potter

Wendell Potter is a health insurance industry whistleblower and author of 'Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans'

July 12th, 2011 10:11 AM

One Big Reason Why Small Biz Job Growth Has Slowed to a Crawl

Want to be an entrepreneur but also be certain you'll have health insurance?

Good luck with that. You might seriously consider moving to Denmark or Canada. Those countries have not only achieved universal health care coverage for their citizens -- coverage that's not tied to employment -- but they have also moved ahead of the U.S. in the Small Business Administration's ranking of entrepreneurial performance worldwide.

Contrast that with our situation stateside. Many of America's best and brightest are locked in soul-killing corporate jobs because of this country's employer-based health care system. A lot of them undoubtedly would love to make a break from their corporate jails and start their own businesses. But they won't -- especially if there's a family to support -- because they fear losing health care benefits and not being able to find decent coverage on their own.

When it comes to recruiting the best talent, big corporations have a hefty advantage over small business owners in this country. With hundreds and often thousands of employees, large firms can spread the risk of insuring their workers and offer coverage with richer benefits and lower premiums than small businesses. And most big employers are able to pay a larger portion of their workers' premiums than small employers. Big companies that offer health care benefits also have historically enjoyed tax advantages that have not been available to small firms.

This is one of the reasons the U.S. Chamber of Commerce, which represents the interests of big business in Washington, was so adamantly opposed to the Affordable Care Act, which will begin to at least level the playing field for small firms.

The insurance industry has been right there with the Chamber in opposing important parts of the reform law. Last year alone it funneled more than $85 million of policyholders' premiums to the Chamber to help finance its ongoing campaign against provisions of the law they don't like -- especially the ones that make some of their standard operating business practices illegal.

One of the industry's common practices is "purging," and it helps explain why fewer and fewer small businesses are able to offer coverage to their employees. Insurers routinely purge small business customers when a worker or dependent gets sick or injured and requires expensive care. The insurer jacks the rates up so high at renewal time that the small business owner often has no choice but to drop coverage for everyone.

For other small firms, just the routine increases in premiums and deductibles become too much to bear.

That happened to Luke Peterschmidt, an entrepreneur and video game designer in Lebanon, Pa. He reached the point that he simply could not continue paying what his insurer was demanding. He likely would have folded his business, Geek Dynasty, and looked for a corporate gig had his wife not landed a job that offered benefits.

Peterschmidt said he bought insurance for his family on his own before his wife got her job. When they found themselves paying about $15,000 a year before their insurance would kick in, they knew one or both of them would have to find a job with a bigger company. Health care costs were taking more of a bite out of the family budget than they could afford.

"Almost like clockwork, it seemed, one of us in the family would need a barrage of tests to check for some serious condition," Peterschmidt said, "only to find out that we were fine each time. The doctors were just being thorough, and nothing seemed excessive, but it was pretty astounding how for four years or so we managed to always have at least one thing happen.

"The killer for us, though, was when the 'annual' deductible plan only ran for nine months," Peterschmidt said. "I signed [up for] a plan in January that had an annual deductible, but because the plan only lasted nine months and I started to approach the deductible, when October came around, they raised my deductible without ever telling me. This led to a situation where I should have been getting reimbursed for expenses, but they now fell under a much higher deductible.

"It turned into a classic 'little guy versus insurance company' fight. They finally admitted that they never told me about the policy change, but they only reprocessed about 20 percent of the bills they should have paid me back for. At some point, I had to give up chasing them as it was cutting into the time that I needed to give to my paying clients."

Everything changed for the better -- at least from an insurance point of view -- when his wife got a job with benefits.

"My wife's plan is excellent," Peterschmidt said. "We have some copays, and certain things, like dental and vision, aren't covered at a high level, but now that I've experienced life with personal insurance, I really appreciate having it through an employer."

The drawback for the Peterschmidts -- and it's a big one -- is that Luke and his family can't relocate as they had once planned to do.

"We live in Pennsylvania, but my clients are in LA and NYC," Peterschmidt said. "This is undoubtedly slowing the growth of my business. In addition, because I know how much insurance costs, I can't imagine ever providing it for my employees. This greatly reduces the pool of available talent. Who would leave a job with health care for one without? Health care really messes with the ability of potential employees to take risks and work for small risky companies. So now, my only potential hires are young people -- who thankfully (because of the Affordable Care Act) will be able to get coverage from their parents, people with spouses who provide health care, and very rich people who can take the job out of love or a higher sense of risk tolerance.

"It's a mess," he said. "Taking away workplace mobility is a huge hindrance on a small company."

The whole country is in an economic mess, and our expensive and inequitable health care system is at least partly to blame. Last week the Department of Labor delivered dismal news about job growth in the U.S. Far fewer jobs were created in June than expected, and the unemployment rate crept up to 9.2 percent.

According to the SBA, small firms employ more than half of all private sector workers in the U.S., and they've generated 64 percent of net new jobs over the past 15 years. Small businesses, not big corporations, are now this country's economic job-creating engine.

The Affordable Care Act contains a number of provisions that should make it easier and more financially feasible for small businesses to offer coverage to their employees. Among other things, small businesses are now eligible for tax breaks if they offer coverage and subsidize premiums. The exchanges the states must establish under the new law are also designed to help small businesses compete for talent with the big firms.

But if the corporate-financed U.S. Chamber of Commerce is successful in blocking the implementation of Affordable Care Act's provisions that make it easier for small firms to attract talent, the U.S. undoubtedly will continue to fall behind other countries that have more equitable and less expensive health care systems. And job growth will continue at a crawl.

You must log in to comment.

You must be logged in to leave a comment. Log in | Register

George W. Bush Debuts New Paintings Of Dogs, Friends, Ghost Of Iraqi Child That Follows Him... President Bush has a new hobby -- painting! --...

Apr 17th
7:28 PM
Read More

Big new story from David Sirota and Pando on top Christie adviser and appearance of corruption at New Jersey's pension fund: REVEALED: Gov....

Apr 17th
12:41 PM
Read More

FBI Uncovers Al-Qaeda Plot To Just Sit Back And Enjoy Collapse Of United States WASHINGTON—The FBI announced today that it has uncovered a...

Apr 15th
3:28 PM
Read More

Revealed: Rahm Emanuel's top donor bought stock in Marriott just before it was awarded huge contract As schools are closed and pensions cut,...

Apr 9th
2:00 PM
Read More

I'll be at First Time Fest today in New York City at the screening of my first film, Roger & Me. Loews Village 7 at 12:30 pm. Come see it on the big...

Apr 5th
9:48 AM
Read More

Revealed: Rahm Emanuel cuts public pensions, diverts money to benefit campaign donors If you've read the financial news out of Chicago the last...

Apr 4th
2:19 PM
Read More

Please take a moment today to think of Casey Austin Sheehan, son of Cindy and Patrick, who was murdered by U.S. foreign policy in Sadr City, Baghdad ten years...

Apr 4th
2:00 PM
Read More

ICYMI - I've joined this "thunderclap" to support the Connecticut legislators who voted yes on last year's Act Concerning Gun Violence...

Apr 3rd
7:38 PM
Read More

I've joined this "thunderclap" to support the Connecticut legislators who voted yes on last year's Act Concerning Gun Violence Prevention...

Apr 2nd
8:27 PM
Read More

I am opposed to the death penalty, but to every rule there is usually an exception, and in this case I hope the criminals at General Motors will be arrested...

Apr 1st
3:55 PM
Read More

How Long Some in the US Will Survive Under New Health Law Donna Smith Those who must access care to live and can afford it are not...

Mar 31st
10:13 PM
Read More

Last night, The Good Wife on the East Coast started 40 minutes late due to the overrun of the NCAA basketball game. If you had your DVR set for the show, you...

Mar 24th
5:41 PM
Read More

Watching films today, looking for the ones I'm going to pick for my film festival this summer. I (and a whole bunch of others!) have this thing we put on...

Mar 23rd
4:48 PM
Read More

When the U.S. Health Care System Keeps Killing, Who Cares Enough to Fight? Donna Smith We have largely forgotten that people are at...

Mar 21st
5:56 PM
Read More

Tell the White House not to give up on Dr. Vivek Murthy's nomination as Surgeon General despite the ferocious opposition from the NRA: Don't give...

Mar 21st
5:38 PM
Read More

This criminal would never see a jail cell, nor would his cronies. In fact, they'd later be rewarded with re-election: Presidential Address on War with...

Mar 19th
9:40 PM
Read More

The crime of the century -- our invasion & slaughter in Iraq -- started 11 years ago tonite in this 7pm (ET) hour, March 19th, 2003: CNN Coverage of...

Mar 19th
9:08 PM
Read More

Washington’s Back-to-the-Future Military Policies in Africa Nick Turse Nick Turse is an award-winning journalist, historian,...

Mar 17th
4:59 PM
Read More

"I think democracy is the most revolutionary thing in the world." -- Tony Benn, 1925-2014 Tony Benn in 'Sicko'

Mar 14th
10:07 AM
Read More

RIP Tony Benn, one of the UK's greatest leaders: Tony Benn, veteran Labour politician, dies aged 88 Former cabinet minister died at...

Mar 14th
9:53 AM
Read More

Please read this important story from K. Ford K.: Am I the Face of the New American Middle Class? I began to feel I had slipped so low...

Mar 13th
2:24 PM
Read More

Yesterday Dianne Feinstein revealed that the CIA has been spying on the Senate Intelligence Committee. This is all about the report the committee has produced...

Mar 12th
6:48 PM
Read More

Health Care for All Colorado has brought Mercy Killers, a show written and performed by Michael Milligan about our murderous for-profit healthcare system, to...

Mar 10th
1:08 PM
Read More

Health Care Dramas that Sting and Why We Have to Watch Donna Smith The realities Milligan has written into the show cut deep into...

Mar 10th
1:02 PM
Read More

Did you know the Lehrer Newshour on PBS has been produced for 20 years by a company owned by conservative cable billionaire John Malone? Me neither. After...

Mar 7th
8:39 PM
Read More

Mr. Obama, if int’l law is so damn crucial . . . | The Russian intervention deserves criticism. But let’s be clear. The...

Mar 6th
1:21 PM
Read More

Enron billionaire John Arnold thinks everyone should believe him when he says we've got to cut pensions because he's so incredibly rich: John...

Mar 5th
4:20 PM
Read More

More in David Sirota's continuing series on the billionaire takeover of PBS: More PBS conflict woes as activists move to eject David Koch from board of...

Mar 3rd
12:35 PM
Read More

Ukraine: One ‘Regime Change’ Too Many? Ray McGovern Is “regime change” in Ukraine the bridge too far for the neoconservative...

Mar 2nd
9:25 PM
Read More

Subscribe to Mike's Blog RSS

Click here to suggest an article

Mike's Blog

See More Blogs

Vew the archives

View older articles