Affordable health care for small companies has reached crisis proportions in South Carolina, and the threat to the state's economy is real, business owners and other experts said Monday.

Health-care costs for small firms are "as high as a Georgia pine," said Brandon Price, who helps run Smith & James men's clothing store in Greer.

Price and his parents, who own stores in Greer and Greenville, make up a group of three and spend about $2,300 a month on health insurance, he said.

But "the people that work here most of their wives carry them," he said.

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The threat poses significant risks to the backbone of South Carolina's economy since 96 percent of the businesses in the state have 100 or fewer employees, Frank Knapp, president of the South Carolina Small Business Chamber of Commerce, told reporters and editors of The Greenville News.

But at least 60 percent of the state's small businesses don't offer health insurance to their employees, most citing affordability, he said.

"That number is growing every year," Knapp said.

Susan Berkowitz, director of the South Carolina Appleseed Legal Justice Center, an advocate for low-income people, said state and federal officials estimate there are up to 850,000 uninsured people in the state.

"That is a crisis," she said.

Tom Conway, owner of Free Spirit Mobility & Home Medical, a health-care equipment provider, said he offers health insurance for his eight employees, but "I'm having to look at how long I can keep offering it. It's very important. Most of these folks have families. You can't afford to even break an arm or a leg" without insurance.

Even thinking about halting insurance coverage "makes you feel bad," he said. "You want to take care of your people. But it all revolves around costs. You think, 'What am I going to do?' "

The lack of insurance contributes to small-business employee turnover as workers move to larger companies that offer the benefit, Knapp said. Helping companies provide affordable health insurance "would stabilize the work force in small business," he said.

Nearly everyone agrees there is a crisis, he said, but few come up with solutions. Knapp also said he and others would support an increased cigarette tax to pay for various health-care programs.

Small businesses in South Carolina have few options for affordable health insurance for employees, said Lynn Bailey, a Columbia-based health-care economist.

The private, small-group insurance market for employers with two to 50 employees, is "pretty well broken" in the state, said Bailey, who specializes in strategic management and planning for health-care providers.

It will take "some innovation, some creativity, some leadership" to fix the system, she said.

"We need to visit what we mandate in South Carolina, which makes it very difficult for private insurance companies to create affordable products," Bailey said.

"We need to look at new and creative ways of expanding the pool (of health-care coverage)."

One reason small employers have a hard time finding insurance is that "they're stuck with the individual underwriting that goes with that small group," Bailey said. The basis of health insurance has been that the young, healthy workers subsidize the use of services by the older, less healthy employees, she said.

"As we've redefined those pools so they're smaller and smaller and smaller, you lose all the benefit for insurance of pooling," Bailey said. "So we need to be more creative about figuring out how to pool folks."

The average cost in South Carolina for individual coverage for a man in his mid-30s is about $3,600 a year, depending on the mix of options chosen such as drug coverage and dental coverage.

Women in their mid 20s to mid 30s who want maternity coverage will pay closer to $5,000 a year for individual coverage, Bailey said.

"If you want to get into couple or family coverage, you're looking at between $6,000 and $10,000 a year" for private insurance with a fairly standard $300 to $500 deductible and coverage for generic drugs, Bailey said.

"If you can find somebody who'll write it," she said.

For people who have a pre-existing condition -- such as diabetes, surgery within the last year or two, or a cancer such as leukemia as a child -- insurers may exclude them from coverage, Bailey said. Or the insurer may choose not to underwrite that person and throw him or her into a high-risk pool with much more expensive coverage, she said.

A potential solution could be public funding of reinsurance for insurance companies, allowing them to limit their exposure, said John Ruoff, research director for South Carolina Fair Share, a consumer organization. Reinsurance should attract more companies to write health insurance policies for small businesses and individuals, increasing the competition, he said.

Also, the Small Business Chamber is supporting a pilot project that partners small businesses with federally qualified community health centers providing primary care. The first relatively large project pairs Mid-Carolina Steel and Recycling with a local community health center, Knapp said. About 25 employees and their families are involved in the project.

The cost is below that of most health care because the center is nonprofit and has a federal funding subsidy for people with incomes up to 200 percent of the poverty rate, he said.

The employer's cost for health care during the first three months was $980. He paid the entire cost of the health care after a $10 co-pay per visit.

"He's thrilled. The employees are thrilled. The health-care center is happy," Knapp said.

This does not provide insurance and doesn't cover major medical problems, but it should cover 85 percent to 90 percent of health-care needs, he said.

Price said he doesn't know about the program, but he would be willing to consider it if his employees had no access to insurance.

The 19 community health centers, with 128 locations, are requesting $5 million in additional funds to care for up to 50,000 more people, Knapp said, and the Small Business Chamber is actively lobbying for that funding. It also is continuing to try to match up small businesses and health centers.

Berkowitz said another option is to expand Medicaid. Currently, Medicaid is available for children living in families making up to 150 percent of the poverty income, or $27,000 for a family of four. That could be raised to 200 percent of the poverty income.

In addition, the state could seek a federal waiver for a Medicaid buy-in for people working in small businesses, she said. The state share for the additional people could be paid by employers, employees or both. By using Medicaid, the cost could be as little as $100 to $115 a month. She and Knapp said that an income limitation probably would be needed.

Oklahoma had adopted a similar program.

Another solution could be to open the State Employee Health Plan to businesses and individuals, Ruoff said.

"This would provide an opportunity for those companies at the margin," such as those who once provided insurance coverage but halted it because of increasing costs, he said.