Full Committee Hearing on “Health Care Reform in a Struggling Economy: What’s on the Horizon for Small Business?”



of the

Honorable Nydia M. Velázquez, Chair

House Committee on Small Business

“The American Recovery and Reinvestment Act will go a long way in helping entrepreneurs weather the storm of recession. But, even after it is enacted, the new stimulus won’t clear every cloud. The rising cost of healthcare continues to be a major stumbling block for small firms– an obstacle that threatens to restrict their ability to create new jobs for American workers. Until that roadblock is cleared, these businesses will be unable to grow, and unable to help lead the path to economic recovery.

“Most of the country’s attention is now fixed on the faltering economy. But that does not make healthcare reform any less urgent. In fact, reigning in healthcare costs is as critical to financial recovery as restoring accountability on Wall Street. As soaring premiums cut deeper and deeper into profit margins, many entrepreneurs are slashing coverage for employees and their families. Still others are dropping it altogether. But perhaps worse yet, countless businesses have been forced to scale back their workforce. With unemployment at a 16-year-high, we simply cannot afford to lose more small business jobs. Especially considering that entrepreneurs are the country’s greatest job creators. Clearly, healthcare reform for small firms is more than a moral obligation– it is an economic imperative.

“In today’s hearing, we will discuss the rising cost of small business healthcare, and the barriers it creates for financial recovery. We will also explore ways to break down those barriers, and to bring the economy back on track.

“In the last two years, healthcare costs have climbed at twice the rate of inflation. For small firms, premiums have jumped 80 percent since the year 2000. As a result, coverage for small business workers has dropped off significantly. In less than a decade, it has declined by 16 percent for some of the smallest firms. Today, in the face of growing economic challenges, small businesses can no longer absorb these outlays. With lending down and credit tightening, few entrepreneurs have the resources to meet basic obligations like payroll, let alone provide health insurance.

 “Clearly, the current health care system is unsustainable for employers, as well as their employees.  As Congress discusses healthcare reform, one of the issues before us is that of employer mandates.

“I understand there is significant concern about whether health care reform will include mandates that small firms offer coverage.   This issue must be addressed in a way that will not unduly burden small businesses.  The reality is that reform cannot work if it does not meet the needs of our nation’s entrepreneurs.

“Beyond mandates, this Committee has been working to find consensus on the broader health care reform issues.  Last Congress, working in a bipartisan manner, Members of this Committee introduced the CHOICE Act, legislation that would have gone a long way in addressing small employers’ health care needs. Today, along with Mr. Graves, I am reintroducing the bill. It is our hope that it will help make healthcare more accessible for small businesses.

“As the country continues to consider recovery legislation, it is critical that healthcare reform play a role in the process. Yes, the American Recovery and Recovery Investment Act promises billions of dollars in tax relief to entrepreneurs. And yes, it will help unfreeze credit markets. But unless we can find a way to make small business coverage more affordable, the benefits of the stimulus may be blunted by healthcare costs. How can we expect entrepreneurs to lead the way out of recession when they can’t even afford to insure their employees?

“The more money that small firms are forced to pour into healthcare, the less capital they have for bringing on new workers. And at the end of the day, that is what a stimulus should be about–creating jobs. Small businesses can do it, but they’re going to need all the means necessary, beginning with increased capital through healthcare reform.”

House Small Business Committee Democrats

B343-C Rayburn HOB

Washington, D.C. 20515

(202) 225-4038


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