Adler Must Support Health Care Reform

Courier-Post — Friday, November 6, 2009

For the Courier-Post

Addressing rising health care costs is necessary to our country's economic recovery and small businesses are a driving force of our economy. Hence, we must understand the key problems health care poses for small businesses and support reforms that will strengthen these economic engines. Still, scant attention has been paid to the burdens our troubled health care system imposes on small businesses.

Chuck Kirby of Medford and his wife Jan own and operate Kirby Bro's, a pet and animal supply and feed store. Kirby Bro's is part of Medford's mercantile history, getting it's start four generations ago in 1875 when Chuck's great-great-grandfather and uncle ground local farmers' grains at Kirby's Mill on Church Road. In 1896, the Kirby brothers moved their business to a storefront at 67 N. Main Street, where Chuck and Jan continue to serve loyal customers today.

Kirby Bro's has endured over 130 years of economic ups and downs, but Chuck and Jan say these times stand apart from the rest, especially when the price of health insurance is factored in. The couple has seen insurance premiums for their business' plan increase 10 percent to 12 percent a year over the past 10 years. The co-pay for a doctor's visit is $25, up from $10. And it's $50 to see specialist. If Chuck, Jan, or one of their employees were to go to the hospital, they'd have to cough up $150 a day and $100 for the initial emergency room visit.

The owners are grateful they have not had to face these charges yet, but are worried about a time when they might need to. Chuck noted, "Health insurance was expensive 10 years ago, and it only gets worse each year. We have other expenses, too, but health care is something we can't ignore." Still, the couple has had to give up certain benefits in an attempt to keep their health insurance costs down.

A recent NJPIRG white paper, "Small Businesses at Risk," finds that Kirby Bro's is not alone. Small business owners throughout New Jersey find themselves stymied by a health care system that costs them too much and leaves them with little bargaining power and few options for coverage. In just three weeks, close to 100 small businesses from across our state, including 24 small businesses from U.S. Rep. John Adler's district, signed onto a NJIPIRG letter asking Congress to pass reforms that would give them a high-quality, low-cost health care plan and force private insurers to compete for their business.

Since 1999, premiums for small business health care plans have been growing four times as fast as wages. These unsustainable cost-increases have squeezed New Jersey's small business owners, forcing many to choose between covering their employees and closing their doors. As a result, since 2000, the proportion of small business that offer health care to their employees has fallen from 68 percent to 59 percent.

Even a small business which tries to lower its premiums by shopping around finds that this is often a futile endeavor. With few employees, the business has little negotiating power to get a fair rate. This combined with high broker fees and administrative costs, means that a small business pays up to 18 percent more than big businesses for the same coverage. Chuck and Jan are fortunate to belong to a merchant's association, which gives them more bargaining power than if they were to buy a health plan on their own. Still, the couple's premiums are unaffordable and merchant's associations through which business owners can buy health insurance don't exist for all types of trade. Jan has shopped around for more affordable alternatives, but hasn't found anything comparable, even through the insurance she has now is far from satisfactory.

These problems, facing Chuck, Jan and New Jersey small business owners alike, will only get worse. Without significant changes, one study estimated that in a decade small businesses will see their health care costs double.

New Jersey's small businesses, including Kirby Bro's, need health care reform so they can continue powering our economy. Fortunately, the reforms currently under consideration in Congress address small business' needs.

They'll be able to pool their bargaining power when buying insurance through new buying pools called exchanges.

New rating rules on insurers would prevent them from jacking up small business' rates when one employee gets sick.

Tax credits would help small businesses that are struggling to cover their employees.

And a public health insurance option would give them the choice of a high-quality, low-cost plan and force private insurers to compete for small employers' business.

These changes will make New Jersey's small businesses stronger, lowering their health care costs and keeping their employees healthier. When employees have health care, absenteeism declines and productivity increases. And lowered health care costs will make it easier for entrepreneurs to hire new workers and create jobs, boosting our state's economy.

Congress is facing a stark choice Saturday: pass President Barack Obama's plan to reform our health care system, or condemn small businesses like Kirby Bro's to a future of rising premiums and falling benefits with no relief in sight. Our representatives, including Adler, need to push hard for the reforms that will help our small businesses and our economy, not to mention our small town history.

Rebecca Alper is a program associate with NJPIRG, a statewide, citizen based consumer interest organization. Chuck and Jan Kirby own and operate Kirby Bro's. Rebecca, Chuck and Jan collaborated to write this op-ed piece.

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