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If higher taxes will save her money on her employees' health insurance, Jan Naylor says she's willing to support them.

Naylor has about 90 employees, but only 41 of them are covered by medical insurance because most cannot afford the 30 percent of the premiums that she says she cannot cover.

"It's embarrassing that we're the only industrialized country that doesn't provide health care," said Naylor, president of Naylor Hardware, whose family has owned a hardware store in Oakland for nearly 125 years. "It's ridiculous."

Naylor is one of the supporters of a $15.5 billion proposal rolled out Wednesday by a coalition of state business owners, health care professionals, churches and hospitals to provide universal health insurance by subsidizing coverage for low-income residents through increases in the cigarette and alcohol taxes and a new payroll tax.

But state officials and some business leaders criticize the plan as too costly.

"While the goal is noble, it has to be balanced with state budget realities," said Christine Hansen, a spokeswoman for Gov. Martin O'Malley (D). "Obviously, things will be better with the placement of a new president to help renew the focus on health care not only on the nation, but also the state. But ultimately it comes down to being in balance with the state's budget realities."

The state chapter of the National Federation of Independent Business called the plan dangerous, saying it could drive employers from Maryland.

"They ought to call it unemployment for all," said Ellen Valentino, state director of the business group. "Given the economic crisis we are facing, this payroll tax will be a death sentence for our economy—this is a tax on jobs that will send employers scurrying from our state."

Meager enrollment

in new state program

Meanwhile, the state's new Health Insurance Partnership, adopted by the legislature in a special session last year, will continue to enroll more employers as more businesses sign up, said Karen Black, spokeswoman for the Maryland Department of Health and Mental Hygiene, which oversees the program.

The state effort to help small employers provide insurance for their workers was rolled out Oct. 1 to much fanfare.

But so far, only 60 businesses have applied for the grants, covering about 300 workers and their family members. Employers with two-to-nine employees who haven't offered their workers insurance in the past year are eligible for the grants, which cover up to half the cost in medical insurance.

State officials expected upward of 1,500 employers to apply for the program in its first year.

The coalition, meanwhile, believes its new plan could cover every resident and save businesses money, which would also improve the state's economy.

The plan would expand the state Medicaid program for the poor and subsidize some small businesses by paying for their catastrophic health coverage for employees.

Vincent DeMarco, president of the coalition, said the current economic crisis is the right time to roll this out because so many businesses are hurting because of their health insurance costs.

Under the plan, all businesses would pay a 2 percent payroll tax. The cigarette tax would increase from $2 to $2.75 a pack. The alcohol tax also would go up.

Naylor, a board member of Valentino's group, said she would probably save money under the plan, even with her payroll tax increasing, because she would pay less for her workers' health insurance.

"I believe I'll save about 30 percent," she said. "The plan might not be perfect, but nothing is."

As it is, her insurance costs are falling because so many employees, unable to afford their share of the premiums, are dropping their coverage, she said.

Brian England, co-owner of British American Auto in Columbia, said he also would save money as a business owner under the plan, but more important is the ethics involved.

"We have socialized roads, I drink socialized water from my tap, why shouldn't we have socialized medicine?" England said.