Tuesday, November 3, 2009

Small Business Goes to Washington

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Small business took its star turn Tuesday on Capitol Hill. Senator Tom Harkin, the Iowa Democrat who heads the Health, Education, Labor and Pensions Committee, held a hearing on rising health insurance costs for small companies. And separately, the Main Street Alliance, a group of small business owners who support Democratic reform proposals, flew 134 constituents to Washington from 26 states to lobby their legislators and stand before the media microphones.

We’ll follow up on their day in a separate post. For now, we’ll focus on Mr. Harkin’s hearing, titled “Increasing Health Costs Facing Small Businesses.” If that sounds as if it was ripped from the headlines of your local paper, it was — Mr. Harkin announced at the outset that he was prompted by Reed Abelson’s front-page article on the subject in The Times two Sundays ago, courtesy of a wake-up call from his colleague from Pennsylvania, Arlen Specter. One of the two small-business owners who testified, Walt Rowen, owner of Susquehanna Glass in central Pennsylvania, figured prominently in the article. In his opening statement, Mr. Harkin promised an investigation into pricing practices in the small group market.

Congressional hearings reflect the biases of the people who hold them. Two weeks ago, when the Senate Small Business Committee held a similar hearing, the notion of a public option was barely mentioned, because its chair, Mary Landrieu of Louisiana, opposes it. (Ms. Landrieu titled her hearing “Reform Done Right: Sensible Health Care Solutions for America’s Small Businesses.”) Mr. Harkin, by contrast, supports a strong public option, and brought it up repeatedly over the course of two-and-half hours.

The hearing, then, served not just to lay a Democratic defense against Republicans who oppose reform altogether, but also to shore up the liberal position against more moderate Democrats, particularly those on the Finance Committee, who produced a less aggressive reform proposal. “To America’s small businesses, I have a simple message,” he said. “We are fighting for you, and help is on the way.” He might well have meant his own committee — “H.E.L.P.”

The entrepreneurs didn’t always keep to the script that the Democrats had written for the day. Art Cullen, editor of The Storm Lake Times in Iowa, was there to root for the public option, but he wasn’t quite as enthusiastic about it as Mr. Harkin probably hoped. What he really wanted was to be rid of the obligation to provide coverage altogether.

“Get it off our backs,” he told the senators. “If that means a public option, fine. If that means an insurance exchange of some sort, fine. But give us a way to get out from underneath this albatross. It’s become expected that small businesses will provide insurance, even if they can’t afford it. And we cannot afford it.”

And when Senator Jeff Merkley, Democrat of Oregon, talking up the insurance exchange, asked Mr. Rowen if health costs had “direct impacts on your ability to hire additional employees, or to pay your employees more,” Mr. Rowen demurred. While higher expenses reduce employee raises, he said, “I think most small businesses hire employees because their business is doing well, and they lay off people or cut back because their business is not doing well. I’ve never been a believer that we hire because there’s a better tax situation, or that there are better government benefits that come to us. When the economy does well, we do well. And when we do well, we hire more people.”

In addition to the two entrepreneurs, four expert witnesses — two chosen by the Democrats and two by the Republicans — testified, and the senators devoted most of their questions to shoring up and tearing down these experts. (Although the most refreshing interlude came when Senator John McCain let the Democratic-backed economist Jonathan Gruber battle it out with the conservative Douglas Holtz-Eakin for five minutes without senatorial interruption. Mr. Holtz-Eakin, it should be noted, was Mr. McCain’s chief economic adviser in the 2008 campaign. “In my experience, he likes fights,” Mr. Holtz-Eakin said wryly.)

But it was the small-business owners who had the last word, and it was unexpectedly powerful. “Everybody here’s talking about being fair to the insurance companies — when have they been fair to us?” Mr. Cullen said. He sounded as if he was at the point of exasperation. “Why do we have to be fair to them? It just incenses me when people talk that way. These people are legal thieves with antitrust protection, and we want to treat them with kid gloves. It drives me nuts!

“And that’s all I’ve got to say.”