Herman Cain is now the subject of considerable attention from the political world, somehow working his way into the top tier of the Republican presidential field. But this is not the first time Cain gained notoriety on the national stage.
The first time, my Monthly colleague Ryan Cooper noted this week, came in 1994, when Cain played a leading role in killing President Clinton’s health care reform initiative. At the time, Cain was both the head of Godfather’s Pizza and the newly-elected leader of the National Restaurant Association, and was given a chance to confront the president at a town-hall meeting in Kansas City during the height of the debate.
Cain’s efforts paid off. Playing the role of a lobbyist, and partnering with the National Federation of Independent Business, the far-right Republican successfully rallied the business community to play a critical role in destroying the entire reform effort.
But the key takeaway from this isn’t just a stroll down memory lane. What matters are the consequences of Cain’s anti-reform campaign in 1994, and as Ryan explained, small businesses lost badly after Cain won.
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.) […]
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.
Cain, in effect, pulled a con. He managed to convince small businesses that the health care reform plan — a proposal that would have helped these enterprises significantly — would have been awful for them. Cain, like most conservatives who pretend to know how best to “help” the private sector, had it backwards. The result of Cain’s failure has meant soaring premiums, fewer profits, and fewer small businesses able to expand and hire new workers.
Nearly two decades later, Cain is proud of his role in killing the Clinton plan. His pride only reinforces fears that Cain has no idea what he’s talking about, and is too oblivious to appreciate how much damage he’s done to the private sector in the 17 years since.