Small firms want relief but disagree on how

As they work to overhaul the nation's healthcare system, President Obama and his congressional allies have pledged to help small-business owners such as Rhonda Ealy and Kelli Glasser.

Ealy, who owns a coffee roasting company in Bend, Ore., has put off buying new equipment so she can offer health benefits to her 13 full-time employees. Glasser, whose firm outside Dayton, Ohio, makes museum and trade-show exhibits, has had to lay off 20 people in part to continue providing insurance to her 87 employees.

Both businesswomen desperately want help. But they have strongly divergent views about what Washington should do, reflecting a broader debate about how to relieve the burden on the nation's roughly 6 million small businesses.

That difference of opinion is fast becoming one of the most intense points of debate in the president's drive to expand health coverage and control the nation's growing healthcare tab.

Ealy loves a Democratic proposal to create a government-run insurance plan, which she hopes will allow her to get her employees better coverage for less. "We're looking for options," she said.

Glasser hates a separate provision in the legislation that would place a new requirement on many businesses to cover their employees. "It's going to make for some very tough choices," she said.

The two women are watching anxiously as Democrats work to pull together healthcare bills they hope to vote on this fall.

There is little dispute that the relief is urgently needed.

On average, businesses pay nearly $4,000 a year to provide insurance for a single worker and more than $9,000 a year for workers with family coverage. That's more than double what they paid a decade ago, according to an annual survey by the nonprofit Kaiser Family Foundation and the Health Research and Educational Trust.

"It's heartbreaking out there," said Kevin Galvin, who owns a commercial maintenance business outside Hartford, Conn., and can't afford to provide health benefits.

Galvin heads a group called Small Businesses for Health Care Reform, which pushed for a new government insurance plan in Connecticut. He said the demand for help is so strong that in less than six months the coalition has attracted 19,000 members.

Congressional Democrats have developed a complex series of proposals they say will control the insurance premiums that bedevil Galvin and millions of other small-business owners.

The foundation of their plan is a new and regulated insurance marketplace, or exchange, where individuals and small businesses -- perhaps those with fewer than 50 employees -- would be able to shop for a range of plans that meet basic standards. The standards would be established by the federal government.

The exchange would feature private plans as well as a new government insurance program, which advocates say would put pressure on commercial insurers to lower their costs and improve quality. Critics contend it could drive private insurers from the market, leaving consumers dependent on the government alone for their coverage.

Some businesses with small payrolls and low salaries also would qualify for government aid to help cover their share of employees' premiums.

While offering new aid, Democratic leaders also would place new requirements on businesses. Under bills developed in the House and Senate, businesses above a certain size would be subject to a penalty if they did not provide employees with health benefits.

"If you're providing health insurance, that's great, and we're going to help you," President Obama explained last week at a town hall meeting on healthcare that he hosted in Virginia. "But if you're not providing health insurance, then you need to pony up a little bit of money to help pay for the fact that somebody, somewhere, is going to be taking care of your employees' healthcare."

That arrangement suits Ealy in Oregon.

Depending on where lawmakers put the cutoff, she might be subject to a mandate to provide coverage to all her workers. But the 41-year-old business owner, who founded Strictly Organic Coffee Co. 10 years ago with her husband, said she would like to be able to do that.

Now, with margins so thin that she and her husband skip vacations and barely pay their mortgage every month, she said she could afford coverage only for her full-time employees, leaving 12 part-timers to fend for themselves.

Three years ago, the premiums cost her about $2,112 a year per employee. This year, the premiums jumped to $3,420 for a less generous policy.

"I don't know how long we'll be able to keep it up," she said.

Ealy is looking forward to shopping for insurance in a new exchange, which she believes would help bring down costs and give her a chance to get into a lower-cost government option.

"If there is a mandate that comes with help, I'll take it," she said.

In Ohio, Glasser, whose business might be too large to qualify to buy insurance through the exchange, is more skeptical. She has 87 employees and a $5-million payroll.

The 39-year-old president of Exhibit Concepts Inc. has had to scale back the benefits she offers her employees and ask them to pay more.

Today, the company picks up about two-thirds of the cost of insuring its employees: $1,786 a year for each employee with an individual policy and $4,450 for each employee with a family plan.

Workers pay the remainder of the premium and have a $5,000 deductible for an individual plan and a $10,000 deductible for a family plan.

Glasser now fears that the government will force her to provide more generous coverage that she can't afford.

Provisions in the House and Senate healthcare bills would give federal regulators the authority to determine what kind of insurance satisfies the employer mandate.

"We work very hard to offer the very best health benefits that we can and stay within our means," Glasser said. "To have it dictated to us by the government is really disconcerting."

Obama and his congressional allies are counting on business owners like Ealy to rally behind their proposals, as many already have.

But with several small-business organizations fiercely opposed to the new mandate, the debate is far from settled.

A proposal in the House bill that would impose a surtax on families making more than $380,000 a year is also fueling criticism that a few small-business owners might be hit. (About 4% of small-business owners would be subject to the tax, according to an analysis by the nonpartisan Joint Committee on Taxation.)

Even some of the president's supporters are calling for more aggressive steps to restrain healthcare spending and bring costs down.

"There are definitely a significant number of small businesses who are willing to pay into the system in order to get some form of reform," said John Arensmeyer, head of Small Business Majority, a left-leaning research and advocacy group.

"But there needs to be more work on containing costs."


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