POLITICIANS SAY that giving small businesses a break on health-care reform is an economic plus. Small companies, noted for their job-creating prowess, wouldn't be hobbled by costly health premiums. Proposals on Capitol Hill would exempt companies with 75 or fewer employees from the mandate that employers pay 80% of workers' premiums. Instead, small outfits could buy deeply discounted coverage, paying only 1% to 2% of payroll, while the smallest could skip insuring workers at all.
IN REALITY, the overall benefit of such schemes is dubious because they likely would shift costs to large corporations. If only big business is required to insure, Wyatt consultants project that big-company plans will pick up an extra 14.1 million beneficiaries. That's partly because lots of small companies will drop their coverage--and legions of their workers will go onto spouses' plans at big corporations. Even the political appeal of small-business breaks is suspect. Lobbies such as the National Federation of Independent Business oppose any employer mandate, despite small-company exemptions.