Few people would argue that the nation’s health care system needs to be fixed.

But the devil is in the details, and that’s what worries small business owners who are leery of what health care reform will cost them.

Kevin Baron, director of government affairs for the American Small Business League, said small businesses and entrepreneurs aren’t opposed to changes because they’re on the front lines battling medical providers and insurance companies every day.

“The health care system isn’t working,” Baron said. “The cost of health care is out of control and needs to be contained. We’re moving in the right direction. The President laid out some pretty broad plans and some specific plans, but I think the biggest concern is how to address costs.”

Insurance premiums for small businesses have risen 110-120 percent since 1999 and are expected to grow 10 percent this year.

Small businesses – typically defined as those with 50 or fewer employees – already pay higher prices than larger firms for a variety of reasons, including state laws requiring small-group health policies to cover certain conditions, treatments and providers.

Also, larger employers often self-insure, are exempt from state regulation and have smaller administrative costs, according to the Kaiser Family Foundation.

“Small businesses don’t want to see an additional tax burden,” Baron said. “House Bill 3200 has language that calls for a tax on income of $250,000 and up, and that concerns small businesses since their personal income is tied to it, and this puts them on the threshold. Small businesses also see a mandate as another tax burden.”

A ‘great concern’

Mary Werner, owner of Tupelo Manufacturing, which makes contract furniture for the hospitality industry, said small businesses are under enough pressure.

Having wrangled with a recession that’s dragged on for nearly two years, small businesses don’t need anything else to worry about, she said.

Talk of universal health care is “a great concern,” said Werner, who is vehemently opposed to what she expects would be another badly managed government-run program.

“They want to borrow another trillion dollars? No!” she said. “They need to fix Medicare and Medicaid first. Why would they even try to create something new when they need to fix what the have now? It’s just mind-boggling.”

Werner, like many other small business owners, think that expanding health care coverage to the 47 million uninsured will hit them the hardest.

“I offer health care, but there are people here who don’t take it,” she said. “Some have insurance through their spouses, but some don’t have any and don’t want any.”

Basic health insurance at Tupelo Manufacturing costs employees $40 a week. The company pays about $15,000 a month to cover the balance.

Mandating insurance for all employees, as suggested by some health care reform advocates, would shut down many companies that simply can’t afford it, opponents say.

Ron Aldridge, the state director of the National Federation of Independent Businesses, said the mandates would be a “jobs killer.”

“Small businesses are in the position now where they’re having to cut expenses to the bone in order to survive in this economy,” he said. “Some have cut back on payroll, some have cut back on benefits, some haven’t posted a profit in 18 months. They’ve got all they can handle. If you start forcing them to cover all their employees, what’s going to happen?”

A company would either lay off employees, cut workers’ hours, delay hiring, cut or eliminate benefits or a combination of the moves, Aldridge said.

Raising prices for customers also would be an option, Werner said.

Tax credits?

Aldridge said giving employees tax credits similar to what employers receive would be one way to make health care more affordable. Eliminating the additional premiums small business have to pay also would help.

And both Aldridge and Baron say that attacking costs should be the key to any health care reform. Eliminating waste and fraud, implementing tort reform and allowing individuals and businesses to buy insurance across state lines are other key ideas that should be considered, they say.

“If the president is concerned about the waste and fraud in Medicare and Medicaid, why not attack that $600 billion now? Why wait?” Aldridge said.

The proposed insurance exchange mentioned by President Obama also might be worthwhile to consider, Baron said. Even the much talked-about – and feared – single-payer system can’t be dismissed right away, he added.

“I think the proposed exchange is good to see,” Barron said. “We need to find a way to get more competitive pricing, better deals. And the idea of the public option – if done right – could work. But it’s the details everyone is concerned about.”

Any plan that adds to the burden of small businesses should be nixed, Aldridge and Baron insist.

And small businesses are watching carefully how the debate plays out in Washington.

The US government’s is diverting federal contracts intended for medium-sized companies to some of the largest corporations in the world, it was claimed yesterday.

Lobby group, the American Small Business League (ASBL), claims the government's Federal Procurement Data System (FPDS) indicates that government officials are wrongly claiming that “billions of dollars in contracts” awarded to corporate giants around the world actually contributed to the government's 23 per cent small business contracting goal.

ASBL pointed out that the Obama administration claimed that 2008 was a record year for federal contracts awarded to small businesses. However, it notes that some of the firms counted as small business included, General Electric, Xerox, Office Depot, Staples, Dell Computer, AT&T, Hewlett-Packard, 3M Company, General Dynamics, Booz Allen Hamilton, Northrop Grumman, L-3 Communications, GTSI, Raytheon, Boeing and Lockheed Martin.

According to ASBL, US officials also counted dozens of large foreign-owned firms such as Rolls-Royce, British Aerospace (BAE) and French firm Thales Communications as small businesses. Over $254m in contracts to Ssangyong Corporation in South Korea were also counted towards the government's small business goal.

“Federal law requires that a minimum of 23 per cent of the total value of all federal contracts be awarded to small businesses. Obama officials have further reduced the volume of federal contracts going to middle class firms by under-reporting the actual federal acquisition budget, which is the total dollar amount the percentage is based. Obama officials used a figure of $434m to arrive at 21.5 percent of federal contracts awarded to small businesses. The actual federal acquisition budget including top-secret projects is in excess of $650bn,” ASBL stated.

“The American Small Business League (ASBL) projects that by counting big businesses in the United States and Europe as small businesses, and by under reporting the actual federal acquisition budget, the Obama Administration may be shortchanging middle class firms out of as much as $100bn a year in federal small business contracts.”

Source:  http://www.procurementleaders.com/news/latestnews/213-us-freezes-firms-contracts/

It was no secret in Washington that the Bush administration had little regard for the Small Business Administration. During his two terms in office, the agency’s budget and staffing were cut every year, opening the door to waste and fraud and forcing many programs to operate on a shoestring.

The Republican administration’s big business bias was all too apparent in the way the SBA dragged its feet when it came to cleaning up the awarding of federal contracts to small businesses, long a problematic program in which billions of dollars annually always seem to end up in the pockets of Fortune 500 companies.

The Obama administration, of course, promised sweeping change. The president even wooed small businesses during the campaign and picked an experienced administrator to lead the agency.

But the real litmus test of the administration’s commitment to change — and to small businesses — will be how effectively it deals with long-standing contracting abuses. The new Obama SBA went through its first rite of passage on the issue last Friday when it released its annual “score card” on small business contract awards.

Congress has set a goal requiring the government to award 23 percent of all federal contracts to small entrepreneurial firms. The idea is to give them a leg up, so one day they can become large firms and major employers.

In its press release, the agency claimed that small businesses had received a record $93.3 billion in federal prime contracts during the 2008 fiscal year, up almost $10 billion from 2007. Of that amount, almost $3 billion went to disadvantaged businesses, women-owned businesses, and businesses owned by service-disabled veterans. That’s up about $1 billion over last year.

While the numbers are impressive, the agency failed to meet its congressionally mandated goal for the fifth year in a row. What’s more, this year is worse than last. Just over 21.5 percent of all eligible contract dollars went to small firms, compared with 22 percent in FY 2007.

Eagle Eye Publishers, a Washington area firm that tracks federal contracting, puts the actual FY 2008 figure closer to 19 percent once a wide range of “exclusions” (contract awards not counted when figuring the goal) are added back in. Exclusions include contracts paid for from funds other than congressional appropriations, such as user fees, and contracts awarded overseas.

“No amount of positive spin by the Small Business Administration can make up for the over $30 billion lost in FY 2008 due to the federal government's failure to meet small business contracting requirements,” said Cris Young, president of the National Association of Small Business Contractors, in a statement.

“This is not a single-year accident. The federal government has failed to meet its small business contracting requirements for the past five years,” he added. “We have called for fair access to contracts for years. Instead we get promises and press releases.”

The SBA reported, however, that it exceeded its contracting goal for disadvantaged small businesses. Government awards topped 6.6 percent, compared with a 5 percent goal. But it still missed goals for women-owned firms, service-disabled vets, and HUBZone firms.

On even closer examination, critics note that major corporations still seem to have their hand in the till, largely winning awards through smaller affiliates.

“Of the 10 largest recipients of federal small business contracts, eight of the firms were clearly large businesses and received 85 percent of the total contract dollars,” said Lloyd Chapman, president and founder of the American Small Business League. “Of the top 100 recipients, 64 percent of the contract dollars went to large businesses.”

Chapman has been a leading critic of the SBA’s contracting oversight, and during the presidential campaign his organization endorsed Obama, hoping for change. He says the SBA has been fabricating and inflating data on small business contracting awards for nine years, and he fears it will be business as usual under the new administration.

Chapman contends that Textron was the single largest recipient of federal small business contracts last year, and it’s a Fortune 500 firm with 43,000 employees and over $14 billion in annual revenue. He says Textron raked in $775.8 million in contracts through their AAI division.

Other firms on the receiving end of small business contracts include: British Aerospace (BAE), Rolls-Royce, General Electric, Xerox, Office Depot, Staples, Dell Computer, AT&T, Hewlett-Packard, 3M Corporation, General Dynamics, Booz Allen Hamilton, Northrop Grumman, L-3 Communications, GTSI, Raytheon, Boeing, and Lockheed Martin, he says.

To address the contracting shortfall, Commerce Secretary Gary Locke and SBA Administrator Karen Mills have announced a new government-wide plan. Federal agency procurement officials will hold or participate in more than 200 events over the next 90 days to “share information on government contracting opportunities” with small firms.

“President Obama has made a commitment to ensuring that small businesses have greater access to federal contracting opportunities and it is a commitment shared across this administration,” Mills said in a statement.

“We have already begun taking aggressive steps to connect small businesses with contracting opportunities, as well as increase our outreach to federal agency procurement officers to make sure they get the information and tools they need to help them connect with these good, innovative, small companies,” she added.

But Chapman notes that during the campaign Obama promised to restore the SBA budget, restore the SBA Administrator to a cabinet-level position, and implement a long-delayed 5 percent woman-owned small business contracting goal. “Not one of these campaign promises has been honored,” he says.

The jury is still out on the Obama administration’s true commitment to small businesses. Despite the press releases, the posturing, and the promise of procurement fairs, the real litmus test for reform will be the administration’s commitment to cleaning up the contracting mess. It has been a sore spot for far too long. Much of what went on during FY 2008 was not on this administration’s watch. But it won’t have that excuse next year.

Source:  http://www.allbusiness.com/company-activities-management/company-structures-ownership/12743713-1.html