MerchantCircle, a social network for local business owners, has shared some results from its first Mechant Confidence Index survey of over 12,000 business owners. The firm found that only 23% of merchants believe the worst of the recession is behind us, although only 5.7% expect their businesses to fail.

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A critical issue in the Congressional debate on healthcare is whether the new legislation will include a "public option." Part of the problem is that there is little agreement about what the public option should be. Some see it as having the government act as a provider of last resort. Others mean a national one-payer system based on the Medicare model. Still others mean healthcare cooperatives, though they do not exist in most of the US.

This lack of clarity around the definition has created a serious ideological divide. For many of its supporters, a public option should be a first step towards the greater goal of a UK-style government run healthcare system. The same perception is precisely what drives the public option's opponents, who do not want the country to start down that path. This fierce debate is not likely to be resolved in the near future, and left unchecked it could unfortunately block the whole legislative effort.

Let's go back to the overall objective of the healthcare bill, which is to provide healthcare to the previously uninsured at a reasonable cost — an objective supported by the Congressional majority. To deliver this objective, Congress is proposing two state-based measures:

First, every state will be required to expand the coverage of its Medicaid program — from most residents below 100% of the poverty line (e.g., $20,000 per year) to all legal residents below 133% or 150% of the poverty line.

Second, every state will be required to establish a public agency that will act as a group purchasing agent for the uninsured residents of that state. The agency will put together a menu of healthcare policies — with high quality care at reasonable costs — to be offered to the state's uninsured. In putting together this menu for the uninsured, the agency will negotiate for healthcare policies with various insurance companies. Due to economies of scale and its expertise, an agency should be able to negotiate better rates and terms than individuals could on their own.

Negotiation, however, only gets you so far, and it's here that a public option is needed. If we want the agency to further reduce healthcare costs for the needy, then it could should be required or allowed to offer as one choice in its menu a state run healthcare plan as the public option. This could be, for example, a healthcare plan for local teachers or state government employees.

This definition of the public option would fit well into the system of state-based measures envisioned and it would be consistent with our traditions and structures; health insurance in the U.S. has always been organized and operated on a state-by-state basis. Offering the extra option would not cause a major organizational headache.

To sum up, using a state based plan as the public option would have the following advantages:

• It will be a public option without the ideological issues raised by a national plan.
• It actually exists in some form in every state or region, unlike, say, healthcare cooperatives that some people are proposing.
• It will offer the uninsured an additional choice of a high quality healthcare policy at a reasonable cost.

Do you favor a state based definition of the public option, another definition, or no public options?

Bob Pozen is a senior lecturer at Harvard Business School and the author ofToo Big to Save? How to Fix the US Financial System

There’s been a lot of talk in the news about how important the small business community is to the economy as they are the source of 65 percent of all new jobs created in the U.S. in the past 15 years. This week is set to be another important one for small businesses. Reuters says the Obama administration will hold a small business forum with lenders, lawmakers, regulators and business owners this Wednesday, November 18. The aim is to “define a new initiative to boost lending to smaller firms and help reverse U.S. job losses.”

I usually try to leave the politics at the door in my small business VerticalResponse, but when I noticed just how often small businesses are being included in political debates, I decided to investigate more.

So we set up a quick survey to ask our customers what they think. We also partnered with the Small Business Development Center, which helped us to reach 831 small businesses across America.

For me, one of the most concerning things reported in this survey was the difference in healthcare offered by small business of various sizes. A whopping 71.8 percent of businesses with one to 10 employees do not offer healthcare to employees, versus the 69.4 percent of businesses with 11 to 100 employees who do offer healthcare to employees. Some people may not be surprised by that statistic, but that’s no comfort to the small businesses that are currently unable to offer healthcare to their employees.

Seeing the huge disparity between small businesses on providing healthcare, you may think that we consistently saw differences reflected across all of our questions. This was definitely not the case. When we asked whether small businesses would cancel their current employer-provided coverage if given a public offering, only about 16 percent of respondents in both the one to 10, and 11 to 100 employee range said they would.

In the longer answer section, we saw that many of our customers chimed in with passionate opinions on this particular question. So we asked some of our local customers to elaborate on their survey results, and got two notable opposing views.

Theron Kabrich, CEO of San Francisco Art Exchange, had great reasons for supporting a public healthcare offering: “A public offering of healthcare unburdens small businesses and entrepreneurs alike, as it allows them to focus on core parts of their business such as innovations and new products. It also removes an unfair competitive advantage for small businesses when trying to attract the best employees, and levels the playing field.”

However, Leslie Hennessy, owner of Hennessy's Wines and Spirits, was on the other side of the fence for this one: "I don’t believe government-sponsored health care is a good thing for small businesses. Americans don't want socialized medicine, we want a free market."

Both of these VerticalResponse customers have between one and 10 employees, and completely different points of view. I’m not a policymaker, and I don’t profess to have all of the answers. However, I think the large difference in opinions between small businesses of different employee sizes highlights the need for the current government to consider the diversity of the small business community when deciding on public policy.

Regardless of whatever new initiatives are decided in the small business forum on November 18, I am happy that small businesses are front and center in the ongoing political debates. I know I’ll be watching them closely to see how VerticalResponse and our customers are affected. What are your feelings about healthcare? Please share your thoughts below.