Business owners struggle with insurance needs, costs

Margaret Bauman

Oct. 23, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- Downtown Anchorage pub owner Daniel Zivanich is quick to acknowledge that he pays more than $10,000 a month for health insurance for his 16 employees, and that's the way he thinks it should be.

"It's about as good a plan as you can get," said Zivanich, who owns F Street Station and the Cabin Tavern in Anchorage's Muldoon area with business partner Ed deFapio.

Why does he do it?

"I want to have good employees, and I want to keep the employees," said Zivanich, whose workers include people who have been with him for 24 years. His average employee has been with him eight to nine years, he said.

"If a business can't afford to take care of its employees, pay them a decent wage (including health insurance), you don't have any business being an employer," he said. "That said, I'm not justifying the cost going up. It's ridiculous. We pay out close to $130,000 a year at F Street just for health insurance."

The government should be looking into why health care is so expensive, he said.

Zivanich came to Alaska in 1961 and got his first job working at the Driftwood Lounge, now the Woodshed, in Downtown Anchorage. In 1974, he opened F Street, which has become popular with the business crowd looking for a light meal or appetizers with their drinks.

Zivanich is trying to keep his overhead costs under control, but said he's feeling the squeeze.

"Right now people have money here in Alaska, and jobs, but there is a limit to how much you can raise prices to cover costs," he said. "In my case, the only one being hurt (financially) is me."

Still he is determined to continue with his policy of paying the full cost of medical and dental insurance for everyone who works for him.

Zivanich's employees are among a lucky few whose employers pay 100 percent of the cost of medical and dental insurance plans.

Government agencies, and many major private-sector employers, expect their employees to share the cost of health insurance.

Most private employers, including some who used to foot the entire bill, now expect the workers to pay a portion of the cost of health insurance.

One of them is Perry Merkel, owner and operator of Cafe del Mundo, a coffee roastery, with a popular Midtown Anchorage espresso shop.

Merkel started providing health care coverage, with a $250 deductible, some 15 years ago for his full-time employees. As health insurance costs increased, Merkel moved to paying 75 percent of the cost, with workers paying 25 percent.

Come Nov. 1, he'll offer to pay only 50 percent of the premium costs for a policy with a $2,500 deductible. He expects just four of his employees to buy into the plan. The others are insured through the Veterans Administration or their parents' policies, he said.

Merkel himself is insured under his wife's plan at the oil company where she works.

"These costs for premiums are doing nothing but going up and up and up," he said.

Still Merkel said he wants to continue offering health insurance to any employees who want to buy into the deal.

Merkel said that controlling health care costs has become a major concern of all small business owners and that he supports health care cost reforms.

"I'm not sure what the answer is, but there's got to be something," he said. "On both sides of this issue there are going to be things too radical, too much. But to do nothing, status quo, is not an option."

Other small business owners say they simply can't afford any insurance plan for employees.

Sarah Braley, manager of Dress by Celeste, a Palmer clothing shop, said health insurance for employees would be a goal if the shop were to grow.

Braley, a student at the University of Alaska, said that because she is a student, she is still covered under a health insurance carried by her mother, who owns the shop. The other employees are covered under their family's policies, she said.

Denise Statz, owner of the gourmet cooking shop Nonessentials, in the same Palmer shopping mall as Dress by Celeste, also said she can't afford a health insurance plan for employees.

Statz, who has been in business for about 23 years, is covered under her husband's insurance plan. She plans to pay out of her own pocket for thousands of dollars in dental and medical care needed for one employee.

The employee, whom Statz described as a dedicated worker and mother of a young child, has to have some health care, so they found a dentist and a doctor willing to take payments over time, Statz said.

"We figure she has about $8,000 in dental care and $1,000 in medical, and that's just preventive health care for a young woman," she said.

Margaret Bauman can be reached at

margie.bauman@alaskajournal.com.

Newstex ID: KRTB-0097-39141393