August 5-11, 2004

city beat

At Issue: Health Care

Insurance costs are on the minds of candidates and local small-business employees.

by Dan Keashen

Two months ago, Tenth Street Pourhouse floor manager Steve Lim faced a rude awakening when his health-insurance payment jumped from $621 to $817 a month.

While having to ante up an extra $196 would be a difficult proposition for most small-business employees, Lim's predicament was still better than facing what Lance Vaughan's going through. Vaughan, manager of the nearby Beaux Arts Video, is among the ranks of the uninsured.

"Me and my boss looked into [health care] a while ago, but we couldn't afford to swing it," he says. "It was just too expensive."

Lim and Vaughan are clearly not alone.

As the election season swings into high gear, health-care expenses are on the minds of many voters. As such, it's becoming an important issue in the U.S. Senate race between incumbent Arlen Specter and his challenger, U.S. Rep. Joe Hoeffel. Both candidates are proposing solutions to the problem.

Specter has co-sponsored a Senate bill that promotes associated health plans (AHPs), which would give small businesses the same market-based advantages that large companies and unions receive when it comes time to negotiate insurance plans for their employees. Hoeffel's plan mirrors the reforms that presidential nominee John Kerry has been speaking about on the stump, including during his nomination-acceptance speech last week.

Specter's Health Care Assurance Act of 2004 promotes legislation that would provide health-care coverage to the uninsured. He outlined how the implementation of these programs can be done during a recent address to the Senate. According to an example cited by Specter, the American Restaurant Association could negotiate a plan on behalf of the hundreds of thousands of employees who work for its member businesses.

Once the plan is in place, each individual restaurant could choose to participate in this plan at much better health-care rates than it could ever have negotiated on its own.

Although there has been support for Specter's proposals, the most recent Congressional Budget Office study found that the majority of those covered by AHPs already would have been insured. AHPs would provide new coverage for only 600,000 of the nearly 44 million uninsured Americans.

Health-policy specialist Martin Taylor of the Oregon Nurses Association says that AHPs are a "wolf in sheep's clothing" because health-care premiums would increase 80 percent for the 20 million Americans working in small businesses. Based on this analysis, AHPs could be detrimental to Philadelphia's small businesses.

According to Hoeffel's campaign Web site, his plan for small-business health care is spawned from the same plan that produces his own coverage in Congress through the federal employee health plan. Hoeffel backs Kerry's stance of unburdening the small-business contingent with a tax credit for employers. The credit would be used to alleviate the current high cost that low- to moderate-income employees have when purchasing individual health-care plans.

Hoeffel has co-sponsored a resolution to provide quality affordable health care for small-business owners and all Americans. The resolution was created to provide access to comprehensive health care for all Americans, including the eight million children that are currently uninsured.

His plan has an all-encompassing feel to it, but has been criticized for an unspoken caveat of federal funding to assist the program by removing the financial barriers that exist in providing needed health care to the small-business community.

Health-care costs have made inflationary gains on small business by rising 47 percent over the last three years. Right now, 60 percent of the 43 million uninsured Americans are small-business owners or employees or these people's dependents. In 2002, 63 percent of small business that did not offer health insurance cited the high cost as the major reason.

Looking at South Street helps put the matter into perspective. Even with the chain-store influx, small-business owners still constitute roughly 80 percent of the marketplace. At What's on Tap, manager Elise Kline thankfully has coverage through her employer.

"Luckily for me, our owner is really cool," says Kline. "I have an individual HMO plan that my owner pays half for and that's costing him about $2,000 a year."

Short of her employer kicking that money in, Kline would be strapped with a $4,000 out-of-pocket bill. It's that dichotomy that had the manager of Subzero skate shop, on Fifth and South, angry at the system. He says there should be a system that covers everybody, not just the wealthy.

"My friend in Vancouver skates and ends up in the hospital with [broken bones] like I do, but he doesn't have to pay anything for care," says manager J.R. Neves.

Right now, Neves is riding with minimum coverage from Pennsylvania Blue Cross and is paying on average $125 a month for it.

"It's the barest form of coverage you can have, which is ridiculous," he says. "The whole system needs an overhaul and until medicine goes back to treating people as humans and not working for profit, nothing will get done."

At Issue: In the months leading up to the November election, City Paper will take an occasional look at how specific campaign issues affect Philadelphians.