For small businesses, a ‘ridiculous’ burden
Health costs rise, but reform options leave local owners baffled
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The cost of health-care coverage at Sams Clothing in Livingston, which has 15 employees, is going up about 20 percent each year.
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December 9, 2009
The heads of three local family-owned businesses expressed frustration with the rising costs of health care, and confusion over potential solutions.
All provide health-care plans for their employees, and all are looking at massive increases in premiums in the coming year.
“We’re looking at a 32 percent increase in costs for next year,” said David Behrman, president of Behrman House Publishers, located in Springfield. “Our premiums are going way up and I don’t know why. I’d like to know what’s going on.”
With 15 employees, the publisher of Jewish-themed textbooks and other works spends an estimated $50,000-$70,000 per year on health care, contributing 80 percent of the premiums. Employees contribute 20 percent.
“What affects us most directly are premiums,” said Behrman.
Meanwhile, costs at Sams Clothing in Livingston, which has 15 employees, are going up about 20 percent each year.
“There’s something wrong,” said Maurice Cohen, co-owner of Sams with his cousin, Jeffrey Cohen. “Doctors are crying they are not making the money they used to. Premiums are going up; who’s making all the money? Insurance companies must be doing well.”
At the Crystal Plaza in Livingston, which has 100 employees, caterer Allan Janoff said costs are going up “a ridiculous” 18 percent every year.
The current health-care system “is hurting small businesspeople dramatically,” he said. “We can’t pass along a cost increase as quickly as a company like Kellogg’s can by raising cereal prices a nickel a box.”
So what’s a small business to do? Janoff’s company, which he co-owns with his sister, Ronni Janoff Weinstein, reviews their employees’ health-care plan on a yearly basis.
“It takes a long time to get my arms around it. Every year it’s very frustrating to try to understand and figure out all the options,” he said. For the last five to seven years, Crystal Plaza has changed health-care companies every year in an effort to keep costs down. But even that hasn’t worked. “I’ve conceded to a higher copay and maximum to lay out because of escalating costs,” Janoff acknowledged.
At Sams, where the employees are unionized, there are two different plans: one negotiated by the union for most of the employees, and one for the three managers. Maurice Cohen didn’t discuss the details of the employee plan, but the managers, which include him, are shifting to a plan with a high deductible — two to three times what it used to be.
“Our philosophy is to just cover catastrophes and the other things we’ll pay out of pocket,” he said. Three to five years ago, they had a lower deductible plan that covered more, but that’s something the company can no longer afford, he said.
None of the companies will do away with its health plan.
“We believe in that and it’s not expected to change,” said Behrman.
“I think everyone should have health care,” said Janoff, “and there are people in my company who can’t afford it based on the work they do, end of story. They’d go without” if they were not covered by a work-provided plan.
Even at Sams, where the union requires health-care coverage, Maurice Cohen pointed out that being a manager/owner at a local clothing store is not like being at a large corporation.
“Even if the union didn’t require it, I’d want the employees to have health care. I look these people in the eye every day. I’m not Simon Legree,” he said, referring to the cruel slave owner from Uncle Tom’s Cabin. “I’d want to be treated fairly and equitably if I were in their position.”
Each of those interviewed described feeling “confused” about the plans currently under discussion. But they weren’t shy about offering their own prescriptions for a better health-care system.
Behrman wished the conversation would focus on overall costs of the system, rather than just the reimbursement schedule.
“In general, I believe the issue is the overall escalating cost of health care,” he said. He suggested that providing more information to consumers might lead to a solution. “If we could choose doctors based on their success rates, it would encourage physicians to engage in best practices,” he said.
He said he is also interested in finding avenues for physicians that “increase quality and hold down the costs. Perhaps outcome-base compensation.”
Maurice Cohen said he believes too many expensive tests are administered. “I think we’re test-happy. Every doctor wants to put in his two cents and then he gets a piece of the pie,” he said. He’d like to see an “even playing field,” with everyone covered.
“It seems that socialized medicine does work in countries that have it. But I’m not sure we’re set up here for that. I’m just not sure,” Cohen said.
Janoff thinks there should be universal coverage. He expressed feeling, in general, “bewildered, overwhelmed, and frustrated by all the different variables. The process of choosing health-care plans should be less complicated. A lay person should be able to evaluate different plans. And the profits should be spread out more evenly.”
The companies
Behrman House Publishers opened as Behrman’s Jewish Book House in 1921 in New York. It later moved to West Orange and today is located in Springfield. The family-held business is headed by David Behrman, grandson of the founder.
The Crystal Plaza opened in 1916 in Newark as Alpine Caterers. It later expanded into Maplewood around 1952 and finally opened in Livingston as the Crystal Plaza in 1968. The company, now in its third generation, is co-owned by siblings Allan Janoff and Ronni Janoff Weinstein.
Sams Clothing began in Livingston in 1945. Current owners and cousins Maurice and Jeff Cohen bought the business from their fathers, who purchased it from founder Sam Winkler in 1969. The Cohens’ grandfather, Chaim Cohen, opened the family’s first clothing store in Newark on Prince Street in 1899.
Comments
Esther
December 11, 2009
Some good ways to lower health care costs would be to open up competition between health insurance companies across state lines. There are 1300 insurance companies in the United States. We should not be limited to choosing only those from our individual states. Another way to lower costs would be to have tort reform. This would lead to less unnecessary testing and lower malpractice insurance for doctors - thereby lowering insurance costs to the end consumer.
Socialized health care is not good in countries that have it. Their cancer death rates are higher than ours. They have to wait much longer to be treated (more people and less doctors) and lose valuable time in treating their cancers. The health care bill now being debated in Congress is now 2500 pages long; it adds 17 new bureaucracies (and more regulation of our lives), some of which will be deciding who gets what treatment. I don’t want the government to come between me and my doctor. The democrats have recently cut 40 million dollars from the Medicare at home program. It is cutting nursing homes by 15 billion dollars. The democrats are proposing 500 billion in cuts to Medicare. They are cutting out programs for seniors to reduce the cost. Seniors have the most health problems and are expensive. According to Ezekiel Emanuel, (Rahm’s brother) they have less value as their remaining years are less (See article he co-wrote in the Lancet - “Principles for allocation of scarce medical interventions” or check out Ezekiel Emanuel on Wikepedia ) and are therefore dispensable. I would call that rationing care or in more picturesque language - “death panels.”
Let’s fix what’s broken with health care - insure the uninsured and lower costs. Let’s leave the rest alone. (Why should the government be in charge of 17% more of our economy?) It is much cheaper and will not destroy what is the best medical system in the world.