posted on:  7/19/2006    revised: 3/10/2010

Political activism is nice, but it does not pay the bills.  The National Federation of Independent Business (NFIB) has been a major voice for small business for years but has lost steam recently.  Money Magazine, Fortune and CNN all published reports this month pointing out the slide in NFIB clout and popularity.  Fortune Magazine wrote "This year the NFIB found itself opposed not only by AARP, the American Cancer Society, and 39 state attorneys general, but also by its ideological allies".  I would count myself as one of those ideological allies that opposes the NFIB.

The NFIB serves three primary functions:

1. act as political advocate

2. provide educational resources

3. sell insurance to members

While purpose #1 and #2 get virtually all of the media attention, only purpose #3 contributes to fund the operation and existence of the organization.  This editorial is triggered by the fact that every media report seemed to entirely miss this important point.  Every good business journalist knows that in order to understand what is really going on behind a business trend, you must "follow the money trail".  Apparently this time they forgot.

I should disclose that I had personal and philosophical disagreements with former NFIB CEO Jack Farris and had published a number of critical articles.¹  Mr. Farris retired earlier this year after the NFIB lost a long-fought and expensive battle over association health plans.  Virtually every independent commentator (including myself) and a long list of large and respected organizations opposed the AHP proposal because it simply was a bad idea that could not work, except to enrich NFIB and other similar organizations. 

Ask a typical member why they joined NFIB and if they will give you the honest response that they joined to get access to the association insurance program.  This is nothing new.  Business associations and Chamber of Commerce groups across the country have relied on association insurance programs as a primary method of driving membership for at least five decades.  In fact, if there were no financial advantage to membership in a business association, then these organizations would have a much tougher time surviving.  

The majority of our state insurance departments are committed to the concept that a small business should not have to join an association in order to have access to the best insurance rates.  Our health care affordability crisis is not in any way connected to the source of our insurance purchases.  The same insurance rates must be available all applicants in a similar class.  Solutions to our health care financing crisis will be found not in the distribution of insurance products, but in addressing the real underlying costs that health insurance covers.²

The legislative defeat of the association health plan proposal combined with an growing knowledge among small business owners (due to advancement of Internet-based marketing of national insurance programs)  that there is no economic advantage to buying health insurance through an association has clearly hurt the NFIB.  That is the real story that needs to be told here.

Footnote:

¹ At the core of this disagreement was my belief that if the NFIB really wanted to help address the health care concerns of its members, it needed to listen to the independent expert voices in the field of small business health care and not just those people in the health insurance business who stood to gain financially from the association health plan proposal.  It was my observation that the NFIB ignored the overwhelming body of independent evidence in this field in favor of the path that would enrich itself.

² My work through Freedom Benefits Association is dedicated to promoting affordable solutions like consumer driven health plans that have already proven to be effective in reducing long term costs for small businesses.

Editorial Note: I no longer follow this topic and so the content has not been updated since 2006; the comments are now likely outdated.

keywords:   NFIB, health care reform, AHP

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Copyright 2010 by Tony Novak. Originally produced and published for the "AskTony" column syndication prior to 2007. Edited and independently republished by the author in March 2010. All rights reserved.