The Times, Trenton

Seeking A Cure To Small Biz Health-Care

The Times of Trenton — Sunday, January 25, 2009

In the 13 years that he's owned Ocean Tents & Party Rentals, Joseph Peregman has made many changes.

He expanded the business from a home-based operation to locations in Mount Holly and Manahawkin where he offers everything from simple canopy tents to climate-controlled extravaganzas that can be outfitted with chandeliers. Want real table linens? He offers customers a choice of more than two dozen patterns.

But while much in Peregman's business has changed, there's been one distressing constant:

The cost of providing health insurance for his employees has gone up and up — and up.

"The rates constantly increase year over year," said Peregman, who employs from five to 20 people, depending on the season. "The coverages get less and less, too."

With costs reaching $500 per employee per month, Peregman says he can only afford to insure some of his employees. Those rates provide decent coverage but family members are extra, he said. He would like to be able to buy insurance through a buying pool that covers other small businesses so his costs can be spread out.

"It's tough for a small business to offer the insurance," he said. "It kind of limits me to the talent I can get."

The challenges that small-business owners like Peregman face are likely to gain more attention in the coming months as the Obama administration begins tackling health-care reforms.

Small businesses and the self-employed are among the most stressed when it comes to finding affordable health insurance.

There's no dispute about market conditions but expect plenty of debate about what kind of a solution is needed.

New Jersey Citizen Action, a community advocacy group, is going door-to-door to recruit small-business owners in a campaign for health care reform. The NJ Main Street Alliance, as the campaign is called, also is backed by labor and community groups.

The alliance does not have specific legislative proposals yet and is concentrating on building a coalition, said Crystal Snedden, an organizer for Citizen Action. She said more than 225 business owners, including Peregman, have joined in so far.

However, the campaign is a New Jersey incarnation of a wider bid to press for changes called the Main Street Alliance. And that group, which surveyed business owners in 12 states including New Jersey, is advocating a public insurance alternative to the private market and more government oversight of insurers.

By contrast, the New Jersey Business and Industry Association questions how well the state's regulation of the insurance market for small businesses has worked so far.

New Jersey has one of the most highly regulated health insurance markets for small group coverage in the nation, said Christine Stearns, a vice president at NJBIA who specializes in health insurance issues.

And, according to NJBIA statistics, it's not clear whether state rules enacted in 1992 are helping. "How that market is regulated by the state can have a significant impact on small-business health insurance costs and affordability," the NJBIA said in a survey on health costs last year.

In the survey, the NJBIA found that premiums for small employers are rising more dramatically than they are for large employers and that fewer companies, particularly those that employ an average of six people, are providing coverage. Overall, costs for all companies have doubled since 2001.

Companies that employ from two to 50 people paid an average of $7,251 per worker per year in premiums in 2007, an increase of 9.8 percent, the NJBIA said. Rates were higher for the smaller companies that employ from two to 19 people and the number of these companies offering any insurance has dropped over five years from 92 percent to 75 percent in 2007.

"Certainly, health insurance in New Jersey is incredibly expensive and it's most expensive the smaller your market is," Stearns said.

The NJBIA has a blueprint for change that includes more flexibility, fewer mandates, tax incentives and changes in the rules for setting rates and employee participation. On the surface, the broad goals of the Main Street Alliance seem to conflict with some of these aims.

But since there's no disagreement about the dimensions of the problem, perhaps the search for common ground in a solution will be easier than complex insurance debates have been in the past.

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