WASHINGTON (Reuters) - The mom and pop businesses that make up the bulk of America’s employers, key players in scuttling health reform during the Clinton years, say years of crushing costs have them backing major changes this time around.

A man gets a haircut at a barber shop in New Orleans, Louisiana, November 1, 2005. REUTERS/Lucas Jackson

The National Federation of Independent Business helped derail President Bill Clinton’s effort to overhaul the health insurance system during the 1990s, with a massive direct mail and telephone campaign, and a blitz of lawmaker lobbying.

Now, small companies with an average of 10 workers are bearing the greatest burden of insurance premium increases, which have grown twice as fast as inflation for several years. They’ve started lobbying the presidential candidates early and are pushing for changes to taxes and state laws.

“The situation for small business is much worse than it was in 1994 in terms of cost,” said Todd Stottlemyer, the group’s president. “We can’t just say ‘no’ today.”

It is much cheaper per employee for large companies to provide health insurance, with more employees to balance risk and spread administrative costs.

And workers pay 18 percent more for premiums than their counterparts at larger firms, according to a study by the Commonwealth Fund, a nonprofit research group.

“The NFIB is starting to listen to its members,” said Peter Harbage, a Democratic health strategist who has worked for former presidential candidate John Edwards. “The whole health-care system seems designed to work against small business.”

These companies represent 80 percent of total U.S. employment. The influence lies in these hard numbers, but also their ubiquitousness in grass-roots politics.

“These are the business people that go to the Rotary Club lunches their congressman speaks at,” said Robert Laszewski, president of Health Policy and Strategy Associates, a consulting firm. “They have the numbers, and the personal relationships with the congressmen.”

The group launched its multimillion-dollar campaign earlier this month, including letters to the candidates and town hall meetings with members nationwide.

Polls among its members have found one in three small-business owners say their No. 1 voting issue in the 2008 presidential election will be fixing health care.

EARLY INFLUENCE

And they’ve already influenced the debate.

Democratic presidential hopeful Senator Hillary Clinton of New York, who led the overhaul effort for Bill Clinton, makes an exception for small businesses in her proposal to require employers to provide insurance or pay into a fund that does.

That is a direct result of NFIB’s opposition to her earlier efforts, experts said.

The group has not taken a position on mandates that individuals buy insurance and held a briefing to explore the issue this week.

Stottlemyer said the group backs proposals letting small businesses pool together for greater leverage with insurers.

“All three (candidates) are talking about it, but they are not at a deep detail level right now,” he said. “We’re urging them for more details.”

In general, the Democrats seek universal coverage by building on the current employment-based insurance system, while McCain wants to encourage individuals to buy insurance outside of work by revising the tax system.

McCain proposes eliminating the tax breaks employees receive by getting insurance through work. Individual buyers of insurance don’t get those tax benefits.

In the small-business community, about half are forced to buy their insurance individually, which is far more expensive than group plans, Stottlemyer said.

“There is some equalization that we think needs to take place,” he said.

Experts say that taking away the employer tax incentives could encourage employers to abandon health insurance altogether. Critics also worry that more flexibility in state insurance regulations may dilute consumer protections.

Either way, small business will take a lead in influencing the debate.

“They were a major player in dumping the Clinton plan. They don’t want to be the enemy this time,” Henry Aaron, a health-care economist at the Brookings Institution, said. “They know it’s a national problem.”