Fearing cost of a health mandate

CHATHAM -- Caroline Geishecker quadrupled the size of her gourmet coffee shop and deli this year just in time for Cape Cod's tourist season. Business boomed, and her staff swelled to 18 at summer's peak.

Now, as dusk falls early on empty beaches and she has pared her payroll to eight, Geishecker is angry that Massachusetts lawmakers might force her to help pay for the expansion of health coverage to the state's 500,000 to 750,000 uninsured residents.

A bill approved by the House would require small companies like hers, those with 11 to 99 employees -- including part-time and seasonal workers -- to provide insurance. If they did not, they would be required to pay a 5 percent payroll tax.

The tax would cost Geishecker's 5-year-old Chatham Coffee Company hundreds of dollars a month, a critical difference in revenue for a mom-and-pop operation that survives off margins on $1.50 cups of coffee and $5.50 sandwiches.

''If I could offer employees healthcare, I would. But the whole system is broken. We don't have the money to fix it," said Geishecker, who has written to her State House delegation to protest the plan.

Advocates of the requirement frequently cite what they consider the irresponsible behavior of highly profitable companies such as Dunkin' Donuts Inc., Stop & Shop Supermarket Cos., and Wal-Mart Stores Inc., which, in a 2005 survey, had the highest number of employees whose insurance was provided through government programs.

While those companies are easily recognizable targets, the Chatham Coffee Company and its employees represent broader, less visible problems complicating potential changes to health insurance laws. Like other small employers, Geishecker says she can't afford to provide health coverage to her staff, and most of her employees are part of the state's part-time, transient workforce, earning service-industry wages and scraping by with little or no health coverage.

The business community contends that the House healthcare changes would take a heavy toll on many independent companies.

''Most of our small businesses don't offer insurance because it croaks the bottom line to begin with," said Wendy Northcross, chief executive of the Cape Cod Chamber of Commerce, which is lobbying against the plan to implement a payroll tax. ''The House bill is very troubling, especially for small businesses with seasonal workers."

But healthcare advocates say the employees of such businesses, and other taxpayers, are being shortchanged. With no insurance, they skip regular checkups and preventative tests. And when they get sick, they seek treatment in places like the emergency room of Cape Cod Hospital in Hyannis, burdening government programs, putting a drag on the healthcare economy, and shifting costs, through higher premiums, onto employers who do provide insurance.

''Is it really fair that if one of the employees of this firm gets sick and can't pay, that their competitor down the street who does provide health insurance should have to pick up the tab? That's how the present system provides for the problem," said Phil Edmundson, an insurance executive who is chairman of a Massachusetts ballot initiative called Affordable Care Today.

Separate plans approved by the Senate and House and proposed by Governor Mitt Romney would all provide lower-cost insurance for small companies through a state purchasing pool. The House bill, the only one with a requirement that employers provide insurance or pay a payroll tax, would also expand state Medicaid to an additional 145,000 people and extend subsidies to moderate-income residents to help them buy private insurance.

The House plan and Romney's proposal would both require all individuals to obtain insurance, much like the state's existing requirement for car insurance. The Senate plan does not contain an individual requirement. While the Senate plan does not include a payroll tax, it would require companies with at least 50 employees to pay medical bills for uninsured workers.

The bills will become the focus of a joint Senate and House conference committee, which is expected to begin several weeks of negotiation on a possible compromise, starting as early as next week.

Geishecker said she has an idea for State House leaders: Talk to business owners trying to scratch a living from Cape Cod's seasonal tourism economy. Come see her store, she said, with its locally grown cranberries on sale for $4 a bag, the home baked goods, and the employees heading out the door after the lunch rush to second and third jobs.

If the House payroll tax became law, Geishecker said, she would try to blunt its effect by hiring fewer people, eliminating paid holidays, and paying less than the $9 an hour her lowest-paid workers now earn.

''Not to be mean, but I have to look at the hard bottom line," she said.

She said she is simultaneously dealing with rising energy costs -- including a $1,700 monthly electric bill -- and higher unemployment insurance rates, which rose statewide in 2003 and again in 2005. She declined to say what she pays for rent, but a local real estate agent said lease payments in Chatham have crept to $20-$25 per square foot. That would put Geishecker's monthly lease payments at between $3,300 and $4,100 a month. Even dairy prices are increasing, she said.

Raising prices to counter the cost of a health insurance tax would not be an option, she said. ''You can't charge $4 for a cup of coffee. Nobody would pay it." While the House bill would affect all businesses with more than 10 workers, large chains and businesses with higher profit margins could more easily absorb the costs, she added.

Geishecker said she has yet to make a profit and has been living off of money she saved from a marketing job she held in Boston, and on income from her husband's house-framing business in Hopkinton, where the couple still owns a house. ''My pay is on the someday plan," she said. ''Someday, I will take a profit."

Three employees at Chatham Coffee Company -- two of whom have no insurance -- said they don't believe Geishecker should be required to provide health coverage or be taxed by the state. They said they also don't like the idea of the state requiring individuals to purchase coverage, because they don't want their weekly paychecks reduced by health premiums.

''Everyone's friends here. It's a good relationship with Caroline," said Timothy Adams, 23. He also works as a cook at Mahoney's Atlantic Bar & Grill in Orleans, which offers health insurance, but Adams has declined that coverage because he does not want to pay the premiums. ''I rarely get sick," he said.

Another employee, Catherine Moye, lost her health insurance when she left her job as an art teacher at a local charter school. Now she and her 12-year-old son, who has asthma, are covered by MassHealth, the state's Medicaid program. She works four jobs, including one as a substitute teacher.

Stationed behind the coffee counter, a third worker, Karen Buck, said she lost her health insurance when she quit a job last year and returned to classes at Cape Cod Community College. She recently obtained a routine test from the Visiting Nurse Association of Cape Cod. She said businesses on the Cape can't afford health insurance because of the region's seasonal economy.

''It will put half the small businesses out of business," Buck said. ''If they're out of business, we're out of jobs."

Christopher Rowland can be reached at crowland@globe.com.