Protect small businesses in healthcare reform

IN RECENT weeks there has been considerable debate about the impact of pending healthcare legislation on businesses in Massachusetts. While everyone supports the idea of high quality healthcare for all, we need to recognize the negative impact that a mandate on employers to pay for health insurance could have on the small business community.

Small business is vitally important to the economy of our Commonwealth. Companies with under $10 million in sales are critical economic drivers both as start-ups for new technologies and service providers across the entire business landscape. As incubators for significant new technologies and innovations, many small business owners have helped to establish Massachusetts as the preeminent area for the scientific, technological and biomedical industries. According to the US Small Business Administration, small businesses in Massachusetts employ almost half our workers and account for seven out of every ten new jobs in New England.

The fastest growing segments of new business owners are women and immigrants who have arrived in the United States in the last 10 to 20 years. In Massachusetts women represent 32 percent of the self-employed, and since the 1970s women's share of small business ownership has increased from 5 percent to 38 percent. These small business owners provide value through their success, create employment opportunities for individuals of diverse backgrounds, and inspire the next generation of entrepreneurs. Initiatives should be established that foster the success of these organizations rather than barriers that could stifle a company's growth, or worse, keep it from getting off the ground.

Recently Citizens Bank partnered with Babson College to conduct a survey exploring issues impacting small business growth in Massachusetts. The optimism and perseverance that traditionally comes with starting and running a small business has a direct effect on the broader Massachusetts economy. A reflection of this can be seen in the survey finding that, despite their tepid assessment of the economy at both the national and state level, more than 40 percent of Massachusetts small business owners plan to add new employees and expand their business in the coming year.

But eight out of 10 small business owners also said that controlling expenses is one of their major priorities. Small business owners take risks every day and these risks translate into a ripple effect that increases jobs, tax revenues, and overall economic activity. However, they do not have unlimited resources.

The survey found that the No. 1 impediment to the growth of small business is the cost of paying for health insurance and related products. While we weren't surprised, it is important to examine these findings within the context of the debate. If small businesses are faced with additional mandates related to health care costs, it is likely that we will see a negative impact not only on their growth but the growth of the overall Massachusetts economy.

In addition, the Babson survey unexpectedly found that 62 percent of small businesses support philanthropic causes at least once per year, and about one-third give monthly to charitable causes through donations of time, money, goods, programs, and partnerships. There's ample evidence of the generosity of small business owners here in our own backyard without forcing them to pay for mandates they may not be able to afford.

Despite the high cost of living in our state and the rising cost of health insurance, small business in Massachusetts continues to expand. Over the past three years small business owners say they have grown an average of 29 percent. This is an indispensable engine of our economic prosperity.

The business community needs to work with the healthcare community to devise a solution that is equitable to all in need of access to healthcare but is not a detriment to one particular segment of the economy. Forcing small businesses and entrepreneurs -- especially women and new Americans -- to shoulder the same burden as more established companies goes too far.

Before enacting legislation we need to consider the danger of mandates and the importance to the economy of keeping the small business community vibrant and strong.

Lawrence K. Fish is chairman and CEO of Citizens Bank.