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March 13, 2010

Owners appeal to governor to ease rising health insurance costs

By Paul Leighton

SALEM — When it comes to discussions about the impact of soaring health insurance costs, Gov. Deval Patrick said small-business owners have never had "a seat at the table."

Yesterday in Salem, they had 12 seats — all of them directly across from the governor himself.

In a two-hour meeting at the Enterprise Center at Salem State College, a dozen small-business owners told Patrick of the devastating consequences of their out-of-control health insurance costs.

The owners of businesses ranging from flavored drinks to machine shops to restaurants said the staggering costs of health insurance for themselves and their employees is causing layoffs, stifling growth and threatening to put them out of business.

"It's almost catastrophic," said George Carey of Finz Restaurant in Salem. "We really can't talk anymore about it because it's to the point now where it's suffocating us."

When Patrick asked each owner how much their health insurance costs are going up this year, one response drew gasps from even the hardened business owners.

"Fifty-three percent," said Joseph Kowalik, who owns Graphx Inc. in Woburn. "I should just outsource this company to India and I wouldn't have to worry about this. But I don't want to do that."

New England Cranberry Co. owner Ted Stux told Patrick that health insurance costs — $16,000 per year for a family plan for one of his employees — now account for 10 percent of the cost of every jar of cranberry sauce his company produces.

"I never would have thought about that before," he said.

Karen Barth, owner of a startup company called Flavrz Drink Mix in Gloucester, said health insurance costs are so prohibitive that she would prefer to hire someone who gets insurance through their spouse's plan.

"I have to hire the person who is already covered and I feel terrible about that," she said.

Paula Gravallese, who with her husband owns Caffe Graziani in Salem, said the premium for her family plan went up 29 percent, even though it's a less costly plan with less coverage.

"God forbid, I feel we are just one accident or a disease from closing our doors," Gravallese said. "And we put our life into this."

Patrick said the long-term answer is to change the way medical providers are paid, but he said small-business owners cannot afford to wait for long-term solutions. He called the situation "an emergency."

"Eight-five percent of businesses in the commonwealth are small businesses or sole proprietors," he told the business owners. "If you don't hire, we don't get a recovery."

In an effort to address the problem immediately, Patrick has filed a bill that would cap health insurance increases that exceed 11âÑ2 times the rate of medical inflation.

He also expressed support yesterday for legislation filed by state Rep. Steven Walsh of Lynn that would allow small businesses to form groups that would give them more clout to negotiate lower premiums.

"I'm very open to that," Patrick said in an interview after the meeting. "There's more than one stop-gap solution. The long-term solution is payment reform, but the point is we've got to act. Nobody can help right now but the government. This is how we can help."

Enterprise Center Executive Director Christine Sullivan called health insurance costs "the single unifying catalytic issue" among owners of small companies.

"To listen to small businesses on this topic is excruciating," she said. "Everybody at this table has a tale of woe."

Staff writer Paul Leighton can be reached at 978-338-2675 or by e-mail at pleighton@salemnews.com.

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