Health insurance costs limiting to small businesses

Legislation offers possible answer

Release Date: 7/29/2004

Like many small business owners, Linda Comolli has been searching high and low to find a health plan she can afford.

When her Holliston-based employer, power supply distributor XPiQ Inc., moved her job to California in January, Comolli opted not to relocate. Instead, she started her own accounting and bookkeeping practice, Colonial Business Solutions, an enterprise that she runs out of her house and staffs alone.

Comolli has worked hard to keep start-up costs low, but on Saturday, the benefits she receives through her former employer will end, and she will take on what she knows will be her largest business expense -- health insurance for herself and her 18-year-old daughter.

''It's daunting," she said. ''It's very expensive right now, and my concern is, how much is this price going to go up from year to year?"

Health insurance costs for all businesses have been rising rapidly over the last several years, but smaller companies have been particularly hard hit, causing strain on the businesses that in many cases are the least able to absorb the rising costs.

According to a study by the state Division of Health Care Finance and Policy, companies with fewer than 50 employees paid an average of $857 a month per employee for family coverage in 2003 -- up 17.4 percent from 2002 and 42 percent since 2000. In contrast, larger companies paid $818 a month, up 13.6 percent from 2002 and up 37 percent since 2000.

This discrepancy is discriminatory, say supporters of a bill currently before the House Ways and Means Committee, which would allow groups that represent small businesses, such as chambers of commerce and trade associations, to band their members together to negotiate health care premiums. Supporters say such associations would keep costs down by creating economies and offering small businesses more leverage in negotiating with health care providers.

The bill passed the House last year but then stalled in the Senate, according to its sponsor, state Representative Ronald Mariano, a Quincy Democrat who chairs the Insurance Committee. The legislative session officially ends Saturday, but the bill could be taken up during informal session, which runs throughout the year, according to the House clerk's office.

Supporters of the bill say it is unfair that small businesses are prohibited from joining together to negotiate group rates. This legislation, they say, would level the playing field.

''It's tough enough to compete, but when there's such a difference in cost on a budget item like health insurance, then small businesses are already several steps behind," said Jon Hurst, president of the Retailers Association of Massachusetts, which has lobbied for the legislation along with the Massachusetts Dental Society and chambers of commerce.

Lorraine Kohr, president of the Newton-Needham Chamber of Commerce, said her membership supports the legislation. Kohr said the chamber offers several health care plans to members but that the rates ''could be better."   Continued...