A new state-sponsored health insurance program in New York is drawing fire from small-business owners--the very people it's designed to help.
Dubbed Healthy New York, the subsidized program requires HMOs to sell bare-bones health plans to businesses with 50 or fewer employees at about 25% below market. The sore point: It's only available to companies that don't currently offer health insurance. Some business owners say that penalizes entrepreneurs who have struggled to cover their employees. New York State officials respond that opening the plan to all small businesses would be prohibitively expensive. "Our first target was the uninsured," explains Joanna Rose, a spokeswoman for the state Insurance Dept. Small-business groups hope the second target will be a wider range of companies.
A dark mood is descending on small business. Last January, the National Federation of Independent Business' index of small-business optimism reached a high of 103.6. In December, at 96.7, it sank to the lowest level since 1993.
The index's poor showing reflects small-business owners' expectations for the economy, rather than their plans to hire or make capital expenditures, says NFIB chief economist William C. Dunkelberg. By a 2-to-1 margin, small-business owners expect the economy to weaken over the next few months. Their profits already have: 35% of companies reported declining profits in December, vs. 20% who said profits were up. Just 9% of small companies managed to raise prices in December, well off June's peak of 19%.