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Will Health Care Bill Hurt Entrepreneurs?

The New York Times reported this week that President Obama and Congressional Democrats are gearing up for an "August offensive" in response to groups that are speaking out against proposed health care reform. At least one concerned party about the health care proposal currently under consideration in the House of Representatives comes from the b-school world: Columbia Business School professor Rita Gunther McGrath.

In a recent blog post, McGrath writes that she fears the current plan being considered by Congress "is going to fundamentally alter ... the structure of incentives that shape how entrepreneurs allocate their energies."

Because the plan calls for businesses with over 25 employees to provide mandatory health coverage or be fined 8 percent of its payroll, McGrath believes this will not only have an ill effect on small business, but our economy as a whole. She writes:

With small business growth having led us out of most recessions in the past, get ready for this sector to add jobs far more slowly and with far greater caution than it had previously -- a big blow to an economy that desperately needs a vibrant and growing small business sector.
McGrath also notes that under the plan households that make above $350,000 will face a surtax to pay for medical care. She believes that many of those taxed will be small business owners and entrepreneurs who would otherwise use that money not for luxuries, but for "working capital, inventory, marketing and other unglamorous business necessities."

Elsewhere, other b-school professors are weighing in as well. Professor Tom Buchmueller of the Ross School of Business at the University of Michigan says in an interview posted on You Tube, "President Obama has engaged the health care industry and offered them a chance to be part of the process. ... Now, you can be cynical and say a lot of this is more symbolic than substantive, but I think there is a real potential here."

Buchmueller also explains why he believes Obama has a better chance to pass health care reform than did former president Bill Clinton:

The one thing that's changed is that, in 1994, a lot of these stakeholders thought that no reform -- the status quo -- was better than anything that would come out of Washington. I'm not sure that nowadays the status quo looks so attractive.
As the health care debate rages on, which I'm sure it will for quite some time, I'll be interested to hear other b-school voices tackle the subject. Where do you stand on health care reform?

Stethoscope image courtesy of Flickr user ernstl, CC 2.0