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Fewer Small Businesses Are Able to Offer Health Insurance to Employees

Posted on: Wednesday, 20 July 2005, 00:00 CDT

Jul. 18--Of the estimated 45 million Americans without health insurance, 51 percent live in a household headed by a small business owner or work for a small business, according to the National Federation of Independent Business.

One-third of the member businesses answering a Colorado Springs Chamber of Commerce survey two years ago said they couldn't afford to offer health insurance benefits to their employees.

"I've been an insurance broker for 26 years, and I've had my own agency since 1988," said Lena Farmer, president of Insurance Connection International Inc. in Colorado Springs.

"When I first started in 1979 ... I remember premiums were $36 a month. That's like the nickel candy bar. It's changed size and shape and costs a lot more now," said Farmer, who also is president of the Colorado Association of State Health Underwriters.

Indeed.

Premiums jointly paid by U.S. employers and employees reached an average of $829 per month for family coverage in 2004, according to the Henry J. Kaiser Family Foundation.

Family premiums for PPO health plans, which cover most workers, increased to $851 a month, up 9.7 percent from 2003.

Since 2000, family coverage premiums have increased by 59 percent, according to the Menlo Park, Calif.-based research foundation.

Employer-sponsored health insurance premiums rose at about five times the rate of inflation and worker earnings last year.

"We have been providing insurance for 16 years. In the last couple of years, premium increases were running about 20 percent. It just got harder and harder to swallow," said Julie Ballweber, director of administration and an owner of Cardiodiagnostics of Colorado Springs Inc., a 49-employee cardiovascular imaging service.

The strain is showing.

The number of businesses with less than 200 employees that offer health benefits fell from 68 percent in 2001 to 63 percent last year. The cost of family insurance is virtually equal to the pretax earnings of a full-time worker making minimum wage, the Kaiser foundation says.

Those small businesses that haven't given up offering coverage increasingly are switching to alternatives that shift more of the cost onto employees, said Jaime Amaral, the NFIB's director of health research and development.

"One of the best options is going to a health savings account and a high-deductible health plan," Amaral said.

"(Based on) the numbers we've seen, a million (HSA plans) have been sold since January 2004, and 700,000 were sold to companies with less than 50 employees," she said.

HSAs are the latest health-care coverage plan heralded as a cost-effective alternative for small businesses.

The plans are tax-deferred savings accounts that must be paired with insurance plans that generally trade low premiums for high deductibles of at least $1,000 for a single person and $2,000 for a family.

Businesses typically contribute some money to employees' HSA accounts. Employees are responsible for the rest. Insurance covers catastrophic expenses. Current and future health-care expenses are paid from the HSA account. If the owner stays healthy, the account grows and can eventually be used as a second retirement account.

The NFIB also supports legislation that would allow small businesses to bank together across state lines through membership in an association to buy more affordable health insurance.

The House has passed a Bush administration-supported bill. The Senate has yet to act.

After surveying its members, the Springs chamber asked Farmer to put together a health insurance program. Instead of discounts, the program takes advantage of state laws that allow "bona fide associations" to present their members affordable health packages that aren't generally available.

The chamber's program went into effect last year, and 37 companies have signed up for health plans that Kaiser Permanente and Guardian Life offer only to chamber members.

"It's more of a program that looks at plan design," Farmer said. "It's trying to design products that can fit an employer's budget."

The Guardian plan that Ballweber chose for her Cardiodiagnostics employees is more expensive than the previous carrier's plan -- $809 per month for family coverage versus $736.

But Guardian provides more benefits. The plan offers a drug program, requires lower deductibles and co-pays and pays 100 percent of covered medical expenses after a deductible is met. Employees also have more physician choices.

"We value choice. I don't like HMOs," Ballweber said.

The chamber also has a partnership with Piney Creek Digital, a Colorado Springs company that provides online enrollment and benefits administration.

"I would say that this is the first contemporary (health benefits) vehicle that's been available through our association, and we're cautiously optimistic that this is the correct thing to do," said Dave Csintyan, the chamber's chief operating officer.

The chamber takes no money for providing the program. Any insurance broker who is a chamber member can sell the insurance.

The chamber will price plans for companies that aren't members. To buy coverage, however, companies must join the chamber, Csintyan said.

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Copyright (c) 2005, The Gazette, Colorado Springs, Colo.

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Source: The Gazette

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