By HOWARD FINE
Here’s how fed up small business owners have become about the high cost of healthcare: A majority of them back a government-run program similar to the one used in Canada, according to a recent survey.
The survey, conducted for a newly formed group called Small Business California, found that 52% of the 475 respondents said they either strongly or somewhat favored a so-called single-payer system,and nearly half the respondents to the survey said they were registered Republicans.
“Either small-business owners believe that the system is so screwed up now that the government couldn’t possibly run it any worse or the fear of government-imposed mandates on business is so great that small-business owners will support any other option,” said Scott Hague, president of the organization.
Hague is a Bay area insurance agent who got involved in policy during the workers’ compensation crisis.
The evidence of frustration among small business owners is appearing as state Sen. Sheila Kuehl, D-Santa Monica, continues her long shot effort to create a single-payer system for California.
Under Kuehl’s proposal, a government-operated program would replace private insurance and offer coverage to 7 million Californians who have no health insurance.
“This finding is no surprise to me,” Kuehl said. “When we talk to independent small businesses in local chambers of commerce, we see a lot of concern about the spiraling cost of healthcare and along with that an increasing receptivity to the idea of a single-payer system. Word of the efficiencies inherent in a single payer system is getting out to the business community.”
While Kuehl’s bill was approved in April by a Senate committee, few give it much of a chance of becoming law, especially with Gov. Arnold Schwarzenegger in office. (The Small Business California survey was generically worded and did not reference the Kuehl bill.)
In general, lawmakers are cautious after voters last year barely rejected a referendum on a law requiring employers with more than 50 employees to provide healthcare for their workers or pay into a state fund for the uninsured.
“Whatever is happening out there among businesses, there’s no immediate government action in sight,” said Glenn Melnick, a health economics professor at the University of Southern California. “For the foreseeable future, we’re simply going to see employers push more and more healthcare costs onto consumers and employees.”
Yet healthcare costs have risen to the point the issue has eclipsed workers’ compensation costs as the top concern of small-business owners, according to the survey.
“I can’t find health coverage that’s affordable for my employees,” said Julie Vandermost, head of San Juan Capistrano-based Vandermost Consulting Services Inc., which also has an office in Phoenix.
Vandermost said small businesses lack “buying power” when they shop for health insurance. She also said lawsuit abuse has raised health premiums and priced small businesses out of the insurance market.
“It’s difficult for health insurers to take chances,” she said.
Vandermost doesn’t provide insurance for her workers, but she does offer them a stipend they can use toward getting their own coverage.
The frustration is not limited to small companies. Last month, General Motors Corp. reported that healthcare costs had jumped $800 million in the first quarter compared with the like period a year earlier, accounting for much of the $1.1 billion first quarter loss for the giant automaker.
Nationwide, healthcare costs for employers have risen 10% this year versus last, according to a survey of 550 companies released last month by the National Business Group on Health. That compares with a 12% increase in 2004, but still marked the fifth consecutive year of double-digit jumps.
Alternative Plans
Besides increasing employee premium contributions and co-pays for medications and medical procedures, employers are increasingly looking at health savings accounts and health reimbursement accounts.
Health savings accounts are tax-free instruments that individuals can set up to pay for current healthcare expenses and save for future healthcare costs. Employers have the option to contribute to the accounts.
Health reimbursement accounts are essentially employer-funded expense accounts that employees can tap for medical expenses. They typically range from $1,000 to $2,000 per year.
Advocates of these plans say that once workers realize how much healthcare actually costs, they will be more judicious in seeking treatment. But shifting costs to employees only can go so far, especially if healthcare costs themselves keep rising.
“These rising costs are pushing us to the breaking point, and by ‘us’ I mean both employers and employees,” said Robert Harasta, a Republican.
Harasta is president of BH Tank Inc., a maker of water storage tanks with offices in L.A. and Monterey.
“The pressure is building towards a point where employees are going to end up paying all the costs. And that in turn will increase the pressure towards socialized medicine,” he said.
Fine is a staff writer with the Los Angeles Business Journal.
