By Seanna Adcox, The State
Published January 30, 2008
Small businesses and their employees received a boost Tuesday when legislators gave key approval to a bill that is aimed at lowering health care costs.
The bill allows a group of at least 10 businesses to join together and negotiate cheaper insurance rates than an individual business.
Republican Gov. Mark Sanford considers the bill a top priority. On Monday, he stopped at small businesses across the state and called on legislators to send the proposal to his desk within a couple weeks. The bill, approved by the Senate last year, requires another perfunctory vote in the House.
Bill supporters estimated the business groups could cut small health care costs between 13 percent and 25 percent.
But the state’s Small Business Chamber of Commerce argued it will be of little help to its members.
“The legislation doesn’t do any harm. It just won’t solve the problem,” said chamber president Frank Knapp. “It’s a piece of feel-good legislation, to say, ‘Look, we did something to help small businesses’ without really doing anything.”
The bill allows businesses to form nonprofit cooperatives that can negotiate with insurers and collect premiums. But Knapp said mom-and-pop businesses can’t afford to set up and run such an administrative agency, and such small groups would see little savings anyway.
He favors the state setting up the cooperative and negotiating for cheaper rates for tens of thousands of employees in small businesses statewide.
About 60 percent of businesses with fewer than 100 employees don’t offer health insurance, either because the owner can’t afford to or employees can’t afford the premiums, Knapp said.
On average, health insurance costs $3,500 a year to insure one person and between $12,000 and $15,000 a year to insure a family. But small businesses generally pay 20 percent more for the same benefits as large companies, according to business groups.
The legislation was pushed by the state chapter of the National Federation of Independent Business, which called it a good start. States around the country are looking at different ways to cut health care costs by pooling people and businesses, said Amanda Austin, a legislative affairs manager in Washington.
“We need to give it a chance,” she said about South Carolina’s proposal.
The owner of Jim Hanna Sportswear in Aiken said he’s excited about the possibilities for his 11 employees. Hanna said he had to drop his employees’ health care coverage four years ago during a business slump and could not afford to provide it again until August.
“I talked to my employees, and they’d rather get paid than have health insurance,” said Hanna, 45, whose screen-print and embroidery business was Sanford’s first stop Monday. “When you’re trying to keep good employees, it’s hard. We hope something happens, and soon.”
The Small Business Chamber, which has about 5,000 members, also believes a proposed increase in the state cigarette tax, now the nation’s lowest at 7 cents per pack, should go toward helping small firms provide health coverage.
The governor advocates raising cigarette taxes by 30 cents a pack to cut state income tax rates.
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