Small biz caught in health care tug-of-war (cont.)

For their part, the Democrats aren't offering many realistic alternatives. Kennedy has used the President's proposal as a rallying cry to push his plan for insuring all Americans through Medicare. Last year Kennedy and Kerry were loud supporters of a Senate bill that proposed that the federal government administer health insurance for all eligible small businesses through the Office of Personnel Management. (That office runs the program under which eight million federal government employees are insured by a wide range of providers.) They continue to support that idea, despite the sworn opposition of their Republican counterparts, who can fairly easily block action in the Senate.

Critics of congress's plans, including the National Federation of Independent Business, hate the idea of government-administered insurance, arguing that costs - and taxes - would spiral out of control.

Instead, the NFIB has continued its quixotic campaign for association health plans, which would allow small businesses to pool across state lines to negotiate cheaper rates. Critics argue that AHPs would let insurers escape state regulations, leaving companies with sick employees unprotected. (See "AHPs: Bad for Your Health.") As even the Republican-dominated Congress failed to pass any AHP bills, most see this as unwinnable.

In short, the prognosis for meaningful change remains bleak at the federal level - unless small-business owners, a notoriously busy and fractious lot, start speaking out more loudly. And with a spate of new presidential candidates - each hoping to be seen as a health-care savior - entrepreneurs face a rare opportunity to have their voices heard.

For now, the most tangible action on health insurance is occurring at the state level. Massachusetts Governor Mitt Romney, a Republican, has signed a compulsory health-insurance plan, in which small businesses pool together to receive favorable health-insurance rates. California is considering a similar setup. Let's hope both parties in Washington get tired of being one-upped by the states and start suggesting legislation that has a chance of helping entrepreneurs - and of passing.

Once again, anyone seeking flexibility or creativity should look to the states.

Do you own a business? Got a question about financing, technology, taxes, team management or any other topic related to launching or owning your own firm? Ask the editors of Fortune Small Business, and they'll help you get answers from the appropriate experts.

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