Maine small businesses owners plead in Washington for better health care options

By Rhiannon Varmette

WASHINGTON--Two small business owners from Maine testified to U.S. Senate Small Business Wednesday about the daunting task small businesses face in providing health care to employees.

Kathie Leonard, CEO of Auburn Manufacturing Inc., and Anne Valentine, president of SmartCatalog in Portland said that providing health coverage to their employees is increasingly difficult and that they think that Association Health Plans - a program that would allow for small businesses around the country in the same trade to receive health coverage together - could help.

"I've been in business for 23 years, and the health care financial burden we should has grown enormously over the years," Leonard said.

Senator Olympia Snowe, new chairwoman of the Small Business Committee, said 60 percent of the 40 million people in the United States without health insurance are employed by small businesses.

Leonard said that when she founded Auburn Manufacturing, Inc., which produces industrial textiles, she was proud to offer above average employee benefits of al kinds - a tax deductible child care plan, fitness centers and the company paid for 75 percent of the premium on employee's health plans.

"By paying for the majority of premiums of both the employee and his or family, we were contributing to their family's health, which we believed would help maintain a stable, productive work fore," Leonard said.

At that time, in the mid-80s, cost of an individual premium was 650a year. Today, Leonard said that cost is five times more - 3400 each year.

Snowe said that the average cost of health insurance rose 11 percent between 200 and 2001 and jumped another 12.7 percent between 2001 and 2002.

"Small business finds itself in a hopeless situation with a few grim choices left: 1) to drop the benefits entirely; 2) continue to reduce the benefits as premiums increase; or 3) to self insure… It is frightening to even think about, but we may not be able to continue offering this benefit if current trends persist," Leonard said.

Leonard said that the establishment if AHPs is a good first step that would bypass state mandated benefits and community rating systems that she said unfairly punish small businesses.

Snowe will introduce the legislation to the Senate next week, along with Sen. Christopher Bond (R-Mo.) and Sen. James Talent (R-Mo.). Snowe's spokesperson, Davis Lackey, said that the Senator is optimistic about passing the legislation.

Senator John Kerry (D-Mass.) and Sen. Carl Levin (D-Mich.), however, brought up many concerns about AHPs. They questioned if the Department of Labor has the recourses to finance the program and they worried that AHP would allow insurance companies to do "cherry picking" - charging more or rejecting those clients who are elderly or ill and trying to attract just young, healthy clients.

Snowe said that the legislation specifically forbids such actions, stating that any company that is in the industry and the geographic area of a coverage plan would have to be accepted.

Kerry also said, according to a report Congressional Budget Office in 2000, AHPs would only help about 300,000 people who do not currently have health insurance, while possibly raising the cost for others.

Snowe, Secretary of Labor Elaine Chao, and the small business owners who testified believe that AHPs will reduce costs and encourage many business owners to continue or to start providing health coverage.

"Each time you take on a new cost is seems insurmountable," Valentine said. "But within a few months the income will catch up and costs that seemed impossible become part of a normal check run - except for health care. That is a cost whose growth outstrips my business's ability to catch up. You never get out in front of that cost."

Valentine said that AHPs could help by increasing the bargaining clout of small businesses and therefore allowing small businesses to compete more successfully to keep people from leaving Maine to find jobs with better benefits.

"My staff is small but wonderful. Unfortunately, I am powerless to protect them from the trends in the health care market," Valentine said. "After all their hard work, it's heart breaking to have a discussion about the benefits that will negatively impact their income. It's not just a lessening of compensation; it is a withdrawal of the ledger of employee trust."

Published in The Bangor Daily News, in Maine.