By Monica Chen

mchen@heraldsun.com; 419-6636

DURHAM — When it comes to health insurance, many small-business owners, especially those newly minted entrepreneurs, have to make the difficult decision of going without.

John Pelphrey, who opened LabourLove Gallery in Golden Belt this summer, said he would have to pay nearly $700 a month — and that’s just not financially feasible.

“People suggest getting high-deductible coverage ‘just in case,’ but why should I give money to a company that gives me no benefits until my annual health care cost reaches $5,000?” he said.

Frank Konhaus, who owns an audio-visual equipment business, Kontek Systems Inc., said they provide for all employees when it comes to health care, including their dependents. But their premiums with Blue Cross Blue Shield of North Carolina in recent years have been increasing steadily by about 18 percent to 26 percent a year, often along with reductions in benefits.

“For the most part I think our team is very happy with their coverage and happy that they can choose their own doctors, but these increases are not sustainable,” he said.

In this health care debate, those who are against reform have argued that the economy needs to be repaired first. But the recession has also brought to the forefront the issue of the U.S.’s increasingly mobile work force. Many of those who have recently lost their jobs don’t have health care coverage.

By state estimates, 26.6 percent of adults had no insurance in Durham County, up from 16.8 percent in 2004. In 2007, 17.6 percent of residents also needed to see a doctor but could not because of the cost.

The Greater Durham Chamber of Commerce is now trying to provide some health safety net for businesses in response to membership needs.

The chamber has been in discussion with Duke University and Blue Cross to provide a plan for small-business owners. As of right now, payments will be $300 a month and also include family members. It’s not technically “insurance,” but it offers some form of a medical cushion.

On the other side of the debate, proponents of health care reform often gloss over the effect it could have on the industry.

Leslie Greenwald, an RTI International principal scientist who has conducted health care research for both the George H.W. Bush and the Bill Clinton administrations, noted that at the very least, health care has jobs that can’t be exported overseas.

“From a strictly economic standpoint, if the U.S. wants to spend 15 percent or more of its GDP on health care as opposed to something else, that’s not necessarily a bad thing,” she said. “Spending money on health care has some good economic attributes.”

With such major hospitals as Duke University Health System, UNC Hospitals, WakeMed and others, health care provides a substantial portion of the Triangle’s tax base, directly and indirectly.

Most of Blue Cross’ nearly total statewide work force of 5,000 are in the area, and the insurer paid about $162.4 million in local, state and federal taxes last year.

Health care is also one of the more stable industries. The simple fact is: People will always get sick.

While the Durham metropolitan statistical area has lost 9,900 jobs since July 2008, most notably in manufacturing (4,500 jobs) and professional and business services (2,600 jobs), according to the state Employment Security Commission, the educational and health services had the largest gain, increasing by 1,600 jobs in the past year.

Chris Conover, a senior fellow in Duke University’s Sanford School of Public Policy who recently was a consultant to the state Department of Insurance on the impact of converting Blue Cross into a for-profit enterprise, proposes a radically different route for combatting the problems of health care — eliminating employer-based coverage altogether.

“We have too much health insurance in this country,” he said. Existing tax code has the government subsidizing employer-based coverage to the tune of $250 billion annually, he said.

“The consequence of that is that it encourages employers to provide more coverage than people should have,” Conover said. “That’s one of the reasons that we have rising health care cost. And unfortunately, it makes things more expensive for people who don’t have access to employer-based coverage. Because it drives up costs for everyone.”

Doing so would also increase transparency, because consumers would have to take up the responsibility themselves of researching procedures and knowing what medical needs they have.

Catastrophic health insurance should be covered, and Conover said the employer mandate being proposed would be a bad idea, possibly leading to unemployment or creating undue hardships in the lowest income bracket.

“Such mandates make it appear as if the employer is paying the cost, but realistically, when an insurance mandate is imposed on all employers, the added cost of labor is covered through a combination of lower wages or other benefits or reduced employment,” he wrote in an e-mail.

On the other end of the spectrum, Sue Tolleson-Rinehart, an adjunct assistant professor in UNC Chapel Hill’s School of Public Health, said she believes the public option would be an effective way of opening more insurance to those who aren’t covered in the existing system.

“I think that a public option could improve reform generally by making things more competitive.

But Tolleson-Rinehart said the possibility of the public option making it through the legislative process is “iffy.”

“I don’t think its prospects are looking very bright right now,” she said.