Small firms wary of health care reform Mikulski hears owners' concerns

November 13, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

Routzahn's has closed 10 of its home furnishing stores in Western Maryland over the past 18 months and trimmed its work force to 97 from 300 people. The layoffs might not yet be done.

If a health care reform plan developed by the Clinton administration becomes law, warned the company's owner, Daryl Routzahn, he would have no choice but to continue the staff reductions.

"It's enough to scare any retailer," he told Sen. Barbara Mikulski, a Maryland Democrat, at a round-table discussion in Baltimore yesterday.

Like other small business owners in attendance, Mr. Routzahn expressed fears that his store -- which provides health care coverage to all his employees, unlike competitors such as Kmart and Wal-Mart -- could not survive. Even with a subsidy for small businesses, his health costs would triple, to more than $100,000, under the plan, he said.

In the labor-intensive restaurant business, the ambulance business and the information business, the talk was the same yesterday as Senator Mikulski heard from people who have to meet the payroll.

All agreed that health care needed reforming. But they warned that the Clinton idea that businesses provide insurance coverage at a cost of up to 7.9 percent of gross wages will lead to layoffs, closings and mergers.

"A health care mandate is the last nail in my coffin," said Paula Kreuzburg, a fourth-generation owner of Mrs. K's Toll House, a Silver Spring landmark. She said government taxes and other mandates have turned the business that her family founded 63 years ago into little more than a family-owned tax collector.

Further, a mandate would just about rule out any new minority-owned businesses in Maryland, said Michael Gaines Sr., president of the Council for Economic and Business Opportunity, a Baltimore nonprofit company that helps such businesses. Minority-owned businesses averaged only $33,000 in income last year, and Mr. Gaines suggested a one-to-three year exemption for start-up businesses.

A constant theme at yesterday's hearing, which included representatives of large Maryland corporations, labor groups and insurance companies, was skepticism over whether a national board or other government-run system could work at the projected price. About 37 million Americans are without health care insurance; the plan would mandate that employers provide coverage.

Senator Mikulski, echoing the sentiment of many businesses, said she liked the approach already taken by Maryland lawmakers. A reform law last year set up a system to collect information on medical care and then use it to help change the state's delivery system. State lawmakers also want to demonstrate savings before requiring employers to provide health benefits and so have proposed a voluntary benefits program.

"The Maryland approach has outcomes. It seeks benchmarks," she said. "It affords universal coverage without hamstringing businesses."

Despite the misgivings voiced yesterday, the Clinton plan enjoys wide support from steel, auto and food workers unions, which have been losing wage increases and health benefits as health care became among the biggest sticking points in recent years.

If the Clinton plan takes effect, "we would not constantly be fighting over that issue," said Gail Evans, president of the Communications Workers of America Local 2100.

The plan would take care of at least 300 former employees and retirees of Esskay Inc., the sausage maker that closed its East Baltimore plant earlier this year, leaving employees without benefits as of Jan. 1, according to Joe Cascio with the United Food and Commercial Workers Local 27 in Towson.

It also would help large corporations that are paying up to 20 percent of wages for health care. A spokesman for Bethlehem Steel Corp. said that the company pays $10,000 per employee. General Motors Corp. spends $25 million a year on health care costs in Maryland, or $1,400 per vehicle produced here.

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