I. Introduction

This country is facing a major health care crisis. The last four years has brought per-year, double-digit increases in health insurance premiums and employee coverage has dropped 4 points, from 65% to 61% over the same period. This crisis is even greater in the small-business arena, where only 63% of small-business employers (200 employees or less) offer its employees health care coverage, down from 68% in 2001. Only 50% of employees at small businesses are covered by health insurance today, down from 57% in 2001. These trends are disheartening to both small-business employers and small business employees who may see coverage diminish to nonexistent levels over the next decade if these trends are not reversed. Considering that small-businesses employ over 54% of the American workforce, this is an issue that needs to be resolved as soon as possible.

Both Bush and Kerry have heard the outcry over health care, with both candidates formulating plans to curb the trends. But are their plans feasible and will they work? The answer to both is NO. Both plans contain flaws and inconsistencies that will cost the country hundreds of billions of dollars and will ultimately fail, thereby exasperating the health care problem over the next four years.

I believe the solution to the health care problem should rest in the hands of the institutions that have the most experience in dealing with the insurance industry--the states. The federal government needs only to establish an incentive based program and act in a reinsurance function whereby states can obtain a certain amount of funding and be covered in cases of default. This will allow the states to formulate creative plans that are tailor-made for the problems identified on a state by state basis.

In subsequent posts, I will outline the different elements of both candidate's health care plans that relates most to small-businesses and explain the flaws in each. Then I will explain why I believe that leaving the health care issue to the states could yield the greatest possible results. Finally, I will outline some of the potential pitfalls with leaving the health care problem to the states.

I would like to thank Gordon for giving me the opportunity to guest blog on venturpreneur. The next post in the series will be up tomorrow.

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