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Turning To The State

Some small businesses favor SustiNet health plan

Greg Bordonaro

June 01, 2009

Kevin Galvin has owned a small business for 30 years, but he’s had a hard time growing his West Hartford-based maintenance company from its current staff of seven.

Galvin, owner of Connecticut Commercial Maintenance Inc., hasn’t been able to attract qualified workers because he can’t afford to offer his employees health insurance.

In effort to change that, Galvin has helped organize a coalition of 19,000 small companies known as the Small Businesses for Health Care Reform, which is backing the SustiNet plan, a landmark bill in the state legislature aimed at achieving universal health care in Connecticut by opening up the existing insurance pool for state employees to anyone.

Their support of the bill, which is backed by Democratic lawmakers and social activists, is an interesting and significant development because some of the state’s largest business groups and associations, including the Connecticut Business & Industry Association, Connecticut National Federation of Independent Business and MetroHartford Alliance have raised concerns or opposed the legislation.

“We can’t attract people because there is not affordable, quality health care out there. It’s too expensive,” Galvin said. “The one time I tried offering health insurance we almost went out of business. It’s not uncommon for a healthy worker in his 30s to pay $1,200 to $2,500 a month for coverage. No small business can operate in this kind of environment.”

Small businesses in Connecticut and across the country are facing increasing health care costs that are making it difficult for them to do business, especially in a down economy. Many businesses are being forced to cut back on how much they contribute to company health plans or void their coverage altogether, making them less competitive in the market, experts said.

Galvin said small businesses have never had a voice in the health care debate and are at a major disadvantage in gaining affordable health care because they don’t have enough employees to spread their risk.

By joining the larger state insurance pool, their “buying power will increase making it more affordable for employers,” Galvin said.

Business groups that oppose SustiNet, however, argue that it would do more to hurt small businesses than help.

“It’s a very expensive program and represents a significant increase in the role of government in the procurement and delivery of health care,” said Eric George, an attorney for the CBIA, who added that the plan is projected to cost at least half a billion dollars a year.

“State government has a very poor track record for funding its obligations,” George added, pointing out that the state has large unfunded liabilities for its pension plan.

SustiNet proposes to combine the state insurance pool with people covered under state assistance programs and transitions in the uninsured, underinsured, and small businesses.

George said allowing too many unpredictable groups to join the state pool could potentially drive up its costs for everyone.

Andy Markowski, Connecticut director of the NFIB, said the state should wait and see what changes are made on the federal level, before it acts.

“It’s dangerous when states try to make sweeping reforms all at once,” Markowski said. “Small businesses in the state aren’t in a position for Connecticut to be an experimental proving ground.”

Markowski points to Massachusetts as an example of how state government’s intervention in health care can create problems.

In 2006, the Bay State instituted a universal health care coverage mandate, which required nearly every resident to obtain health insurance coverage. The plan also subsidized uninsured people earning less than the federal poverty threshold.

The original projections were for the program to ultimately cover about 215,000 people at a cost of $725 million. But enrollment is now projected to grow to 342,000 people at an annual expense of $1.35 billion.

Part of the selling point for the Massachusetts plan was that getting everybody insured would drive down premiums, but that hasn’t worked out, according to Bill Vernon, director of the Massachusetts NFIB.

“We didn’t see a lot of difference,” said Vernon, who noted that many small businesses in Massachusetts have seen their annual rates increase 8 to 15 percent. “The demand for services has increased and so has the overall costs for small businesses.”

According to a 2006 study by the Universal Health Care Foundation of Connecticut, 52 percent of the 806 business leaders surveyed named health care costs as their most-difficult business challenge.

Nationally, the coverage rate in firms with fewer than 10 workers is only 30 percent, while the rate for firms with 25 to 99 employees is only 56 percent.

Additionally, half of all the uninsured in the U.S. are employed by a business with fewer than 100 workers, according to the Agency for Healthcare Research and Quality.

Claire Criscuolo, owner of two New Haven-based restaurants including Claire’s Corner Copia which employs about 30 workers, said small businesses should have access to the same health care benefits that state lawmakers get.

Criscuolo said she supports a SustiNet-like plan and hopes that the money to pay for it will come from increased taxes on cigarettes, beer, and soft drinks.

She and her husband pay over $40,000 a year to provide coverage for about 10 workers including themselves.

“The rates are just insane,” Criscuolo said. “Insurers don’t like to insure restaurants because of the transient nature of the business. It’s completely unaffordable.”

Galvin said 80 percent of new jobs in the state are created by small businesses, but fewer than half of those jobs come with health insurance benefits.

Because they lack coverage, he said more than half of his staff have never had a physical at a doctor’s office or gotten their teeth cleaned at a dentist.

“With the economy weakening and challenges for small businesses becoming greater this is a time that small businesses can’t wait,” Galvin said. “We are looking for meaningful change.”