The Cost of Health Care
Business owners pay the cost of health care- Paperwork, fees piling up
By Jack Dew, Berkshire Eagle Staff
Article Last Updated: 12/10/2007 06:49:55 AM EST
Monday, December 10
Gary Happ, owner of the Barrington Brewery in Great Barrington, could perform the alchemy that transforms water, malt, hops and yeast into beer, but when it came time to set up a Section 125 plan for his employees, his powers failed him.
As with hundreds of small businesses throughout Berkshire County and with thousands across the state, Happ is confronting the hoops and hurdles of health care reform.
There is a bevy of paperwork and new reporting guidelines to the state, and complicated calculations to determine where he fits under the law.
And he had to create a "Section 125 cafeteria plan" — a somewhat opaque name for a fund that allows employees to set aside pretax money from their paychecks to pay for health insurance and medical expenses.
"As a small-business owner, here comes the state and asks us to do the administrative work for this new law, with really no compensation," Happ said. "They put us in the middle, and it's another obligation on us."
The state's health reform requires every adult to have health insurance or pay a financial penalty. It also requires any employer with 11 or more full-time equivalent employees to offer a health plan or face a financial penalty.
Of Happ's roughly 30 employees, only five or six are full time, and only four are enrolled in his insurance plan. But he still had to inform all of his employees about their health options, including the Section 125 plan.
"From a small-employer's perspective, it's just more forms that an employer has to deal with. It's a little bit challenging, especially for someone in my age bracket who isn't as familiar with computers," he said.
Gary Kolbran, of Wheeler & Taylor Insurance in Great Barrington, has made himself an expert on the small-business ramifications of health reform.
He produced a 12-page guide that he distributed to clients, only to find that the law was changing so quickly that he had to issue an addendum.
"All along, I feel like the government has made it extremely complicated," Kolbran said, as with the Section 125 plans, which he called an "elegant way to get part-timers to pay less for their health insurance, but they didn't think about the ramifications on small businesses. I'm sure General Electric has a (human resources) department that can handle this. A small business does not."
Although the state spent money marketing new health plans to people and informing them of the mandate, it did very little outreach to small businesses, leaving that task to trade associations and chambers of commerce.
The Retailers Association of Massachusetts, with 3,000 members across the state, conducted two seminars in Berkshire County just to explain small businesses' obligations.
The Berkshire Chamber of Commerce also sponsored several conferences for its members.
But there are still businesses that know little or nothing about the law, including Jessica Rufo, who returned to the Berkshires from New York City and last summer opened Dottie's Coffee Lounge on Pittsfield's North Street.
Rufo does not have enough full-time employees to trigger the health insurance mandate, but said she knows "absolutely nothing" about the law's other requirements.
State Sen. Benjamin B. Downing, a Pittsfield Democrat, said not enough has been done to reach small businesses such as Dottie's. He and other members of the Berkshire delegation insisted that the state's Commonwealth Health Insurance Connector — the agency overseeing the implementation of the new law — hold an informational session in Pittsfield on Saturday to try to remedy that.
State Rep. Christopher N. Speranzo, D-Pittsfield, sits on the Community Development and Small Business Committee on Beacon Hill. He said health reform has had unintended consequences on the smallest of small businesses. It ended, for example, a state program that gave them a health insurance subsidy as both an owner and employee of the same business.
Jon Hurst, president of the Retailers Association of Massachusetts, said the reform should have done more to help small businesses.
Because every adult is now required to have insurance, Hurst said, businesses that offer insurance to employees are finding that more are signing up for programs, which is adding substantially to their costs.
To alleviate that, Hurst said, the state should allow small businesses to band together and buy insurance in bulk.
Otherwise, a large company with 1,000 employees pays less per employee than a restaurant with 12 insured people.
"We have 3,000 members, and we cannot legally aggregate them together and seek a discount," Hurst said. "We believe that is discriminatory and creates a situation in which premiums ... are far higher for the little guy than the big guy."
Both Speranzo and Downing said group purchasing — which would require action on Beacon Hill — deserves serious consideration.
"The Berkshire Chamber put together a consortium to buy energy and get lower costs with large demand," Speranzo said. "That's the right model, and it makes sense that businesses should be able to pull together to purchase health care."