Healthcare Reform: Great for Chain Stores, Bad for My Business

By Casey Coonerty Protti, Owner, Bookshop Santa Cruz, Santa Cruz, Calif.
I took over Bookshop Santa Cruz from my parents four and a half years ago, after they'd been running it since 1966. The first year after I came on, I met with a health insurance broker to discuss employee health coverage for the coming year. He told me, "Good news, there's only a 10 percent rate increase this year!"

At the time, I couldn't see how that was good news, but the rate increases have been much higher in the years since. Every time the costs go up, we struggle to find room in our budget to cover them. It's getting more difficult every year to stay profitable while paying such exorbitant rates. Now, when he calls to discuss health plans, I hold my breath. I dread that appointment.

Troubles finding an affordable plan
We have 35 people on staff, and offer health coverage through our PPO plan to employees who work 24 hours a week or more. We pay 65 percent of premium costs, and cover half of the $3,000 deductible. It's not very comprehensive insurance, but it's enough to ensure that people are covered for doctors' visits and catastrophic care. We see health coverage as a basic right for our employees, and try to protect it as much as we can.

Having a health insurance broker has been very helpful in making sure we find the best coverage for our employees. He gets bids from 50 different health plans, compares costs and coverage, and helps us decide which one to use. When someone's claim gets stuck, he helps us through it. For a small business owner, it's daunting to navigate the health insurance system, so you need someone who really understands how it works.

But even with a broker's help, it's very difficult to find a good health plan. The number of options is shrinking every year. We look at the available plans, and only one or two are within our budget. Over the past decade, we've had to change providers every two years. The premium rates still went up by double digits every year. Last year, our rates went up 26 percent.

We've responded by cutting back on the percentage of costs that we pay. A few years ago we made vision coverage optional instead of mandatory. The next year we reduced the share of dental insurance we pay from 70 to 50 percent, and the following year we brought our share of health coverage costs down from 70 percent to 65 percent. The average employee contribution to health coverage in California is about 23.5 percent, so our staff is carrying a relatively heavy burden. Every year, we have to cut something else just to keep providing coverage.

Health insurance is an employee necessity
Our employee health coverage costs $40,000 a year. We're in an industry that isn't growth-focused, and breaking even is a good year -- that $40,000 is the difference between making a profit or not. Our health care contributions make up about 1.2 percent of total costs, and for a bookstore where a half a percentage point is a good profit, 1.2 percent is a lot of money. If our health care costs weren't so high, we'd use the money for additional jobs, new technology and other investments.

Even though the costs keep going up, I've never really contemplated dropping health coverage. I think it's important to take care of our employees holistically. Providing employee health insurance can help the bookstore succeed, too. Staff members are more likely to come to work, and are happier overall, when they know they don't need to worry about paying for unexpected health problems.

As a retail operation, our wages aren't that high, so offering health coverage helps us attract and retain employees. Some employees work here for health coverage, and at restaurants for tips to support their way of life. We have staff members who have been here for 20 or 30 years, and I know they wouldn't stay if we stopped providing health coverage.

Will reform make a difference?
I support the new federal health reform legislation, but it should have gone further. At this point, we're not seeing any benefit from it -- we're too big to get the small business tax credit.
I'm curious to see if the state group insurance pools are going to do anything to offer more competitive rates. My competition down the street is a multinational corporation, and they can get the same coverage at a much lower cost because they have a lot more employees. I'd like to get that cost break so we're on a level playing field. It's difficult enough competing with a large chain as it is, yet they're receiving deep discounts on health insurance that we have no access to as a small, independent store.

In a perfect world, we'd have a single-payer health care system. We were one of the first businesses to pass out petitions calling for single-payer reform almost 20 years ago at Bookshop Santa Cruz -- look how far we've come in all that time.

The government needs to find a way to dramatically lower the cost of health coverage. If rates keep rising the way they have been, we'll have to keep cutting back even more on what we can offer. I can't imagine making the decision to stay in business and not offer insurance, so if we can't afford to pay for employee health insurance, we'll have to decide whether we can afford to stay in business at all.

Casey Coonerty Protti, the second generation owner of Bookshop Santa Cruz, loves fiction, biography and history books, but recently has been limited to reading Goodnight Moon with her three-year-old daughter, Claire, and her one-year-old son, Devin. She spends most of her spare time looking for ways to further her parent's legacy of community bookselling.
-- As told to Kathryn Hawkins

Resources:

• Learn what impact government health reform will have on your small business.
• Watch out for five mistakes when choosing a health insurance plan.
• Find out whether your business qualifies for the small business healthcare tax credit.