Small Biz: Insurance Mandate Is a Killer

While the debate over a government health plan rages on, a trade group is warning that another aspect of President Obama's reform plan will cost 1 million jobs.

A proposed mandate to insure workers is the No. 1 issue for small businesses, says Michelle N. Dimarob, legislative affairs manager for the trade group National Federation of Independent Business. Emotional congressional town halls are dominated by fears of a government takeover of health coverage. But small businesses are worried they're going to be on the hook to insure their employees, something that's not an option for many businesses, Dimarob says. Only half of her group's members provide insurance.

A major sticking point: Insurance costs are much greater for small employers. These businesses spend an average of 18 percent more in insurance premiums for employee plans than their large corporate counterparts, NFIB estimates. Bearing the cost of health insurance will force many employers to close and will result in the loss of 1 million small-business jobs, the group warns.

That's not to say small employers want to scuttle all talk of reform.

"There's no segment in the population in more need of health reform than small business," Dimarob says. But the House bill that includes the employer mandate "makes the situation worse. It fails to make things better," she says.

While groups like the U.S. Chamber of Commerce also oppose the idea, small-business owners aren't finding a lot of friends in corporate America to help them lobby. When Wal-Mart Stores Inc. endorsed an employer mandate as part of reform in late June, small businesses viewed it as a "real kick in the stomach," Dimarob says.