Herman Cain and small business healthcare

In a surprising swing in the Republican presidential field, Herman Cain has rocketed to second place, just behind Mitt Romney. Like all the other candidates, he has promised to repeal the Affordable Care Act, and even claimed (falsely) that he would have died from his liver cancer under Obamacare. Cain actually got his start in politics helping to defeat the 90’s health care reform plan. Organizations from several different areas attacked the Clinton effort, but some of the most effective opposition came from small business organizations, led by the National Restaurant Association and the National Federation of Independent Business. That effort to kill health care reform, coupled with the total failure of the right to pass (or even seriously propose) their own plan, ultimately hurt small businesses.

In 1994, Cain, then CEO of Godfather’s Pizza, was introduced to the country in this encounter with President Clinton:



As this Newsweek retrospective from 1994 makes clear, Cain and company were key to the defeat of the Clinton health care reform:

The Clintons would later blame "Harry and Louise," the fictional couple in the ads aired by the insurance industry, for undermining health reform. But the real saboteurs are named Herman and John. Herman Cain is the president of Godfather's Pizza and president-elect of the National Restaurant Association. An articulate black entrepreneur, Cain transformed the debate when he challenged Clinton at a town meeting in Kansas City, Mo., last April…

While Cain looks the part of a striving small businessman, John Motley, chief lobbyist for the National Federation of Independent Business (NFIB), looks like, well, a Washington lobbyist… Motley mobilized thousands of small businessmen, including "the Guardians" (the NFIB's 40,000 most reliable members), to work their local representatives...

The NFIB was also effective in lobbying other lobbying groups. They had small businessmen lean on their doctors -- and before long, the AMA…came out against employer mandates. The NFIB pressured the [US] Chamber of Commerce by urging small businessmen to quit in protest of the chamber's support of employer mandates. When the chamber's dues began to drop precipitously, the chamber, too, reversed its position in February.

One might have wondered what ideas Cain and the GOP would offer. After all, it was concerted opposition and a media blitz from Republicans (Bill Kristol famously told the GOP to oppose reform “sight unseen”), medical organizations, and lobbyists from the insurance industry and small business that sunk the Clinton effort. But though Republicans had a counter-proposal to Clinton in 1993 (notably including an individual mandate), during the Bush years no comprehensive reform was even proposed, and the issue festered. From 1995 to 2008 health care costs more than doubled.

Like the GOP generally when it comes to health care, Cain is a lot clearer about what he is against that what he is for. He opposed the Clinton reform, Ted Kennedy’s Patient Bill of Rights of the late 90’s, Canada-style healthcare, and SCHIP (the children’s health insurance program). He opposed both the Medicare prescription drug benefit and the House proposal to allow negotiation with drug companies in order to control the program’s increasing costs. And, of course, he opposed the Affordable Care Act.

Running for Senate in 2003, he said health care would be cheaper if it were more like a free market. While his health care policy site (at a whopping 320 words) does have some small-bore reforms (deregulating the insurance industry and a healthcare tax credit for employees), the only large-scale reform he supports is the Ryan plan to voucherize Medicare,which would save little federal money and drastically increase total health care costs.

Where has this dithering left small business? Because of rising costs, starting in the late nineties, small employer coverage was steadily eroded, down from 65 percent offering coverage in 1999 to 59 percent in 2009, compared to 99 percent of large businesses. More small firms contribute nothing to their employee plans than large firms (for singles, 35 percent versus 7 percent; for familes, 14 percent versus 2 percent), and their employees face increasingly higher deductibles (see chart below). Cain himself may have put it best in 2007: “63 percent of the uninsured…work for small businesses that cannot afford health insurance coverage because the costs keep rising faster than their profits.” (By the way, 60 percent of small businesses would have seen a reduction in premiums under the Clinton plan.)

By staving off any efforts at cost control, Cain and his allies left small businesses in an increasingly untenable position. Health care price increases disproportionately affect small businesses, mostly due to their lack of bargaining power —large companies, with their bigger pools of employees, can negotiate better prices. This is a major drag on the sector, not only making it more expensive for a small business to do the same work as a large one but also impinging their ability to attract talented employees , as large companies can offer better benefits. As Cain and others are fond of pointing out, restaurants are mostly small— according to the NRA, 91 percent of restaurants have fewer than 50 employees, so they are part of this broader trend. Survey data bear this out: a 2008 survey, ironically from the NFIB, concluded: “The ‘Cost of Health Insurance’ continues its reign as the number one small business problem, a position it has held for over 20 years.” Cain himself was interviewed in 1999:

Cain cited health-care insurance as one barrier foodservice operators face in trying to recruit and retain employees. He faulted Congress and the Clinton administration for not coming up with affordable health insurance for everyone.

Herman Cain, when he got cancer, could call up T. Boone Pickens to get him into a top-notch facility in Houston. But his efforts to defeat reform, in the end, did no such favors for small businesses or their employees, who were increasingly left twisting in the wind.

(Cross-posted at Ten Miles Square.)