Tag Archives: SC Small Business Chamber of Commerce

Medicaid expansion would benefit SC’s small businesses

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By Frank Knapp
President, S.C. Small Business Chamber of Commerce

The debate is underway over whether to expand the federal-state health insurance program, Medicaid, to more uninsured low-income South Carolinians.

Opponents of expansion, made possible by the Affordable Care Act, or Obamacare, are led by Gov. Nikki Haley’s director of Health and Human Services, Tony Keck, who runs the state’s Medicaid program. Mr. Keck’s public position is that the issue is not about cost but about making more of our citizens healthy. He argues that expanding Medicaid is an inefficient way of achieving that goal.

In December, I attended a forum where Mr. Keck explained that having health insurance was not a good predictor of health outcomes. Therefore the state would do better in promoting health by concentrating on education and jobs while encouraging our citizens to make better personal choices about their behavior.

But in response to a question I posed, Mr. Keck admitted that a low-income person’s health would be better if he had Medicaid than if he did not. “But at what cost?” he quickly added.

Mr. Keck’s almost reflexive response reveals that the tactic of arguing that Medicaid isn’t the best way to improve health is really an effort to misdirect the debate away from the real issue — cost.

If we remove the partisanship over Obamacare and admit that improving the level of education, size of paychecks and behavioral decisions of the state’s low-income citizens is an admirable but daunting goal that will take decades to achieve, the primary objection to expanding Medicaid to improve health today is cost.

Opponents of expansion say that the state can’t afford its eventual 10 percent share of the Medicaid expansion. Mr. Keck’s actuary projects that the cost to the state could be up to $1 billion by 2020.

Proponents of expansion point to a study that projects that economic activity in the state will increase by $3.3 billion and 44,000 jobs will be created from expanding Medicaid. This increase in economic impact would result in the state actually taking in more revenue than it would spend on the expansion through 2020, contradicting Mr. Keck’s analysis. After 2020 the state’s budget would experience a small net loss due to expansion.

Unfortunately, this cost debate has largely overlooked an important factor associated with not expanding Medicaid — the cost to our small businesses.

Many low-income employees work for our state’s small businesses, and expanding Medicaid will result in reduced costs to these employers.

First, there is a significant cost to a small business when workers are not on the job because they are sick or have to care for family members who are ill. Even employees who don’t miss work when they are sick are less effective. Workers with health insurance for themselves and their families miss less work due to illness and are more productive. Clearly expanding Medicaid to cover low-income workers will economically benefit their small-business employers.

Second, small businesses that want to offer health insurance to employees will find it more affordable under a Medicaid expansion. Small employers with Medicaid-eligible workers will have fewer employees to cover on a private group health plan and thus have less in premiums to pay. In addition, with expansion the cost of the employee’s private insurance will drop due to a reduction in the hidden tax on every health insurance policy, which pays for the uncompensated care for the uninsured. Based on projections by Milliman, the actuarial firm used by Mr. Keck for his cost projections, the reduced premiums could be up to $1,000 per year for family coverage.

The third benefit of a Medicaid expansion involves the requirement of the Affordable Care Act that businesses with 50 or more employees either offer health insurance or pay a penalty. Workers on Medicaid are not counted toward the total number of employees, so the Medicaid expansion would mean that even many small businesses with 50 or more employees could avoid paying a penalty for not offering health insurance.

While our state officials continue to debate the cost of expanding Medicaid, that debate must include the cost to small businesses for not doing so.

Restoring balance between Wall Street and Main Street

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By Frank Knapp Jr.
President and CEO of SC Small Business Chamber of Commerce

The South Carolina Small Business Chamber of Commerce, the U.S. Women’s Chamber of Commerce and small business organizations and owners across this country want Wall Street reform. But you wouldn’t know that from the attention the media gives to the U.S. Chamber of Commerce, which is the mouthpiece for the big financial institutions that oppose reform.

The U.S. Chamber purports to represent small businesses. However, the reality is quite different. The July/August edition of the Washington Monthly features an eye-opening story on Tom Donohue, the CEO of the U.S. Chamber, who has a plaque on his desk that reads, “SHOW ME THE MONEY.”  In 2008, a third of the Chamber’s revenues came from just 19 big companies.

When big oil, insurance and other companies are out of favor because of their greed, they turn to the U.S. Chamber to convince Congress and the public that the needed reforms are bad for business in general and small business in particular. This is exactly what is going on regarding Wall Street reform.

It’s clear that the U.S. Chamber does not represent the interests of small businesses that have suffered because of the irresponsible actions of the nation’s biggest banks. The greed of these financial institutions collapsed our economy and shut down loans and credit lines to our small businesses. We hear macro and micro stories every day about small businesses not getting access to the money they need. And every economist acknowledges that small businesses must hire the employees we need to lead us out of this recession just as they have in the last three economic recoveries.

But ironically, the only business sector that’s apparently hiring is Wall Street, as the New York Times explains in a recent piece. Greed is still alive and well on Wall Street. And we all know that without Wall Street reform, greed will bring our economy down again and tear apart our small businesses — if we can ever get them back on their feet.

Yet, the U.S. Chamber still wants Congress and the public to be afraid — very afraid. Wall Street reform will dry up loans to small business, the U.S. Chamber warns. That’s wrong. Their big bank donors are doing pretty well right now and they aren’t doing that by making small business loans and investing in our communities. They’re making money gambling on Wall Street.

The U.S. Chamber pretends to be a friend to Main Street worried that Sam the Butcher, Joe the Orthodontist and your local car dealer will be regulated out of business. That’s not in the Wall Street reform proposal.

What the butcher, orthodontist and car dealer want are customers — the customers who lost their jobs because of Wall Street greed.

Small business supports this reform because it will restore balance between Wall Street and Main Street through fair and commonsense policies and create a stable, transparent financial environment in which community banks and credit unions can once again feel secure in making loans.

We at the South Carolina Small Business Chamber of Commerce have been strong supporters of a Consumer Financial Protection Bureau to better protect consumers, which includes small businesses. We’re not afraid of good regulation that keeps our customers and us safe from financial predators.

We’re in favor of making banks be banks and not gambling houses. We have been strong supporters of the “Volcker Rule” to put the brakes on proprietary trading by banks — the practice that largely is responsible for bringing us to the brink of another Great Depression.

Congress should just say no to the U.S. Chamber. The financial health of our country and our small businesses depends on it.