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Small Business Owners Worry About Added Costs Of Health Overhaul

Carolyn Beeler
03/30/2010

Now that the national health care bill has passed into law, small business owners in King County are trying to figure out what the new legislation means for them. People like Dave Morell, a subcontractor who does construction work in Seattle.

TRANSCRIPT

Morell: "Government coming in and lowering the cost of business? I've never seen that in the 29 years that I've been doing this."

He sees the bill as just more government intervention. And to him, that always means added expense. Dave Morell owns a small construction firm that does concrete repair in King County and the region. When an earthquake struck Seattle in 2001, he and his crew helped stabilize downtown.

Morell: "This is part of Pioneer Square, Occidental and Jackson, and this is a lot of the old historical brick buildings that were built in the early 1900s. Once the earthquake happened, the buildings actually lifted and came back down, and so what we did was go back and epoxy inject all the seams in the brick, and then made the building structurally sound again so they could occupy it."

Reporter: "So basically you glued this whole block back together?"

Morell: "Correct, yes, we glued the whole block back together again."

When he worked on that project, Morell had a crew of 12. Now, he's down to five employees. The economy has been especially tough on construction workers. Unemployment in that sector reached 29 percent in Washington in the last year.

Morell: "Us that are left behind, you know, struggle to make ends meet, and that's where the fine line is on taxes and other mandates. In the bill itself, there's over 350 times that it mentions penalties and taxes on business. And that's just, that just scares the daylights out of me."

Reporter: "So how has this process of health care reform added to or affected your uncertainty?"

Morell: "Well one of the challenges that we have in this economy is just trying put together our bids. We're putting bids together based on today's costs, and these projects may take a year, year and a half to come out of the ground and become a project. And at that time we're pretty much locked into the costs we gave the owner or contractor today, so we can't afford too much of an increase on that because we can't afford too much of that because we're lean and mean right now as it is."

Reporter: "And health care cost is one of those things you're worried about increasing and cutting into your bottom line?"

Morell: "Correct, yeah, it's the health care, the mandates, the requirements that are put upon us, and just the fear of the unknown."

Proponents of the health care legislation say it will benefit small business owners like Morell. They'll get a tax credit to help cover the cost of insuring their employees. But larger businesses could see their costs go up. Starting in 2014, they have to offer insurance to their employees or pay a fine of $2,000 per employee after the first 30 workers.

So what kind of businesses does this affect? Companies that have more than 50 full–time workers, or, those with 50 or fewer but a lot of part–timers.

Betty Neighbors isn't sure if she qualifies. She runs a temp agency that places workers in the Puget Sound area. Last year she employed about 4,000 people, under a lot of different circumstances.

Neighbors: "There is so much complexity to this measure, it's enormous, it's sweeping, and with it so much uncertainly, what we do know is that by the nature of our business, because our workforce is somewhat transient, they're contingent workers who work part time, some of them full time. So in my mind we are absolutely baffled as to how we'll manage the record keeping and the responsibility to comply with this measure."

Betty Neighbors thinks she'll have to pay penalties for some of her workers. She has tried to offer insurance for her longer term workers. But even an insurance broker couldn't help her find anything affordable. Still, she doesn't see how this legislation will help.

Neighbors: "It's a cost that I don't know that our company or companies like ours, most small businesses can really bear. Especially at a time like this when we've been really hammered by the destructive nature of this recession and the threat of tax increases in Olympia and now this. At some point this just all conspires to break the back of small business. And I just don't know if small business can take it."

If Neighbors is required to pay fines or insurance premiums, she says she'll have to pass that cost onto the companies that hire her workers. She worries those higher labor costs will lead to unemployment.

Aaron Katz says that's a common concern whenever labor costs go up, but he thinks the benefits outweigh any potential downfalls. He's a health policy professor at the University of Washington.

Katz: "You know I understand the concern and there is a relationship between cost and ability to employ people, but on the other hand getting everybody covered is also a benefit to businesses because to the extent they pay either taxes or premiums, they are in part paying for the health care for people who don't have any insurance. So to the extent there are fewer people it means it's that much less cost of uninsured people that costs have to be born by businesses and individuals who do have coverage."

Here's the biggest problem many small business owners have with the health care package: they don't know how it'll work or how much it'll cost them. So they say they can't prepare for it. However it may affect their employee's health, they see the legislation first and foremost as an unneeded burden on their businesses.

For KUOW News, I'm Carolyn Beeler.

© Copyright 2010, KUOW

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