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posted: 4/2/2010 12:01 AM

Business owners fear costs, regulations of health-care reform

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  • Susan and David Balthazor, owners of Day at the Beach tanning in Gurnee.

    Susan and David Balthazor, owners of Day at the Beach tanning in Gurnee.
    Courtesy of David Balthazor

By Robert McCoppin

Health-care reform is supposed to lower costs, but among skeptical suburban business owners, at least one industry is sure to see a cost increase: tanning salons.

Effective July 1, tanning services will get hit with a 10 percent sales tax on services.

Owners like Dave Balthazor, who operate Day at the Beach tanning salon in Gurnee, say the law will cut into the small profit margin of every small-business owner in the industry.

"They felt we were easy prey and would be an opportunity to create a lot of money," he said. "The majority of tanning salons in the country are owned by mom and pop. We're not going to be a big lobby that can go against it."

Besides that very specific tax, some owners of other types of business worry the widespread changes in health-care law will add significant costs and restrictions to their operations.

Large employers like Boeing, AT&T, Caterpillar, and John Deere are taking income tax charges of hundreds of millions of dollars because they can no longer deduct retiree drug benefits for which they get tax-free federal payments.

Among smaller business owners, uncertainty abounds as they try to figure out the impact of the 2,400-page legislation.

Dave Kelsch, president and owner of Advanced Data Technologies in Naperville, said he's still trying to figure out all the consequences.

"Some form of fix of the health care industry was needed," Kelsch said, "but something of this magnitude is a bit overwhelming and too much involvement of the government.

Data Technologies already provides health coverage to its 75 employees, so it won't be affected by new requirements to provide insurance.

But since businesses have to pay $2,000 for every full-time equivalent employee they don't insure, Kelsch said, and family coverage costs $18,000 a year, more companies may decide to simply drop coverage, the opposite of the intended outcome.

"It's providing coverage for everybody that doesn't have it, and how they tax those costs, that concerns me," Kelsch said.

Other businesses are hit by concerns unique to their industry.

Home health equipment providers, for instance, will be subject to accelerated competitive bidding requirements.

Competitive bidding may sound good, but Mike Maggiore, manager of RehabTech, Inc., in Naperville and Burr Ridge, which provides wheelchairs and other equipment, calls it a misnomer.

Maggiore predicts many providers will get lost in the bidding process and go out of business, and service will suffer.

"Out-of-pocket costs for Medicare recipients will go down," he said, "but service and access to equipment will be affected. Does anybody really want their health care delivered by the lowest bidder?"