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October 18, 2011 8:33 PM Herman Cain and Health Care for Small Business

By Ryan Cooper

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 plans, 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.

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 families, 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.)

CostChart


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.

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Ryan Cooper is a National Correspondent at The Week, and a former web editor of the Washington Monthly. Find him on Twitter: @ryanlcooper

Comments

  • kindness on October 20, 2011 11:54 AM:

    Herman Cain, Tea Party representative extrodinaire!

    I got mine. The rest of you can go f**k yourselves.

    Tea Party indeed.

  • blue_Mac on October 20, 2011 9:10 PM:

    Ryan, the stats on small business costs are important, but I also think it's highly relevant to remind the Herman Cains and Bill Kristols of the world that people in the U.S die because they don't have health insurance.

    Estimates vary, and they are only estimates, but no one who studies the issue claims the number is less than 10,000 per year. (Some estimates are as high as 40,000).

    I'd really like to ask Herman Cain if he's ever spoken to the families or friends of the 100,000 or so people who have died w/o insurance since he helped defeat the Clinton healthcare plan.

  • r€nato on October 21, 2011 3:00 PM:

    So one of Cain's few proposals for health care reform is a health care tax credit?

    First of all, this flies in the face of his proposal to simplify the tax code. The tax code got as complicated as it is today, due to a slow but steady accretion of tax credits and deductions.

    I'll add that Republicans are especially fond of these sorts of policies, as opposed to Democrats who tend to favor direct subsidies.

    Secondly, this is yet another ineffective, near-useless patch upon the current crazy patchwork quilt of tax credits and tax deductions which we have used for the last few decades in an utterly failed attempt to address rising health care costs and the ever-present threat of losing everything due to medical bankruptcy, as well as to avoid the widely-proven policy of public health care as the most effective and economical approach.

    These policies are predicated on the assumption that average people would be able to afford health care if only they weren't being taxed so much. This is absurd and it only takes a couple moments of consideration to put the lie to this crapola.

    I make a decent enough living as a self-employed person. I have health insurance, though in order to keep it affordable it's only a notch above a catastrophic coverage policy. I could be exempted from paying every sort of tax, from property tax to sales tax to taxes on my utility bills and cellular bill, and it would barely make a dent in the medical bills I'd get if I were to come down with even a semi-serious illness. I'd probably be able to afford a more comprehensive health insurance policy, but how much tax revenue do we really want to divert to the very expensive and wasteful middlemen known as the private health insurance industry?

  • charles almon (@charles116) on October 25, 2011 2:35 PM:

    Herman is on a mission.
    To become a BRAND and increase SALES
    of his silly books and seminars.

    HE IS NOT A SERIOUS PRESIDENTIAL CANDIDATE.

    His 'followers' even sillier.