Health Insurance for Small Business owners is killing their companies. For most owners, it is the number 2 expense after payroll (even ahead of rent)!
In managing our costs during these tough times, we can do alot to bring down our largest expenses such as our employees and rent, but what do you do about health care? Most owners have “got used to” the 30% increase in prices every year. I would love to be in a business where I could raise prices by 30% every year and give my customer less. This is exactly what the health insurance providers do and it’s getting worse. My insurance went up 110% this year. As a result, most of us are forced to have less insurance and bear the risks ourselves.
President Obama is proposing broad health care changes in this country. I am biased towards a change because I have diabetes and my health care expenses are almost as costly as my mortgage!
The health care proposals all have two key components to it:
1. Small businesses will be required to give their employees health insurance. Some of the suggestions limit it to companies 20 people or more. Others have it at 50 people or more. I think we need to set an upper limit since imposing this on smaller companies will mean less jobs.
2. A Public Option for Health Care. This is needed since it will make health insurance available to more people and I believe it will provide competition to the private insurers.
3. Improve Health Care Quality. The proposals would pay doctors and hospitals more for better quality care. This is a key feature we should not overlook. Better care will mean lower health costs in the future. In business terms, think about making a better product that requires less maintenance and returns!
Many detractors will scream about the cost of $1 Trillion over 10 years. Half of this would be covered by savings in Medicare and Medicaid. Some propose to have the wealthy cover the other half of the cost. I do not believe that we should penalize people for making lots of money. We waste alot of money in government. The savings is there if various politicians will give up their pet projects.
What can you do today before any change:
1. Establish a Health Savings Account for you and your employees. Every pay period, you will be able to put in this account pretax dollars to pay your medical expenses and deductible. It’s like saving 25% for many of us.
2. Look at the plan that you are on to find the right deductible. When you renew every year, take a long look at what is available and what you spent on health care persoanlly last year. Are you a big user or do you just need catastrophic insurance? Are your doctors in network?
What else can we do right now to save our businesses money?
What do you think of the health care proposals?
The HSA piece is critical – and getting an HSA-friendly health plan from a company that knows what it’s doing in that space is doubly critical. Too often traditional insurers will use HSAs as either a bait and switch, or as a half-baked avenue toward selling you the same nickel-and-dime-you-to-death plan.
Small businesses – and big businesses – can see huge savings, and better coverage, with consumer-driven plans tied to HSAs. You’ve got to have a real consumer-driven plan, tho.
And, in spite of what big insurers will tell you, HSAs are NOT complicated. They’re only complicated if the insurer wants to make them complicated to prevent wide adoption.
I appreciate that you have brought up the subject of small business, insurance and health care.
Full disclosure: I have been in the insurance business since 1985 and have run my own brokerage since 1997.
There are numerous issues involved in the reform process. No single party is immune from criticism and no one party is righteous in its plans of reform. To be certain, the government and insurance companies, at least certain ones, are more partners than adversaries.
First, state regulation of insurance must be eliminated. Rep. Melissa Bean, D-IL , has a bill in the House, H.R. 1880, that will provide federal oversight of insurance companies that choose to be regulated federally and thereby eliminate the redundant regulation requirements of the 50 states and DC.
Competition among insurance companies must be increased. Currently, state and federal governments seek to limit competition among insurance companies in order to provide Blue Cross Blue Shield plans monopoly power and operating margin. Blue Cross Blue Shield Plans have the #1 marketshare position in 43 states according to the Center for American Progress. Of those 43, 25 have at least 50% marketshare.
Only by driving down the cost of care, do you drive down the cost of insurance. 80 cents of every dollar of health insurance is comprised of payments to doctors, hospitals, pharma and other providers. Other than creating experts in a bureaucracy, current government draft legislation is not addressing the cost of care, only the cost of insurance.
Consumers/patients need to make their doctor/hospital/pharma/other provider compete. The third-party payer system has enabled this and is one of the primary reasons for spiraling cost of health care. Health Savings Accounts, HSAs, currently assist in helping consumers see the true costs of care and purchase accordingly.
Finally, employers need to be alleviated of the burden of providing insurance. And they can, except that state and federal legislators stand in the way. Non-employer groups, such as associations, bank customers, universities and fraternal organizations are already approved to sponsor and distribute insurance other than health insurance, such as life, disability and accident.. By distributing health insurance through non-employer groups, employers will be free of the nagging burden of health insurance, individuals will not fear losing insurance if they lose their ob or leave for another. Individuals will have guarantee issuance of insurance without pre-existing condition limitations, just like large employer groups provide now.
Barry, the public option will definitely put insurers out of business. And there are many people who relish that. The big three insurers, Aetna, CiGNA and United Healthcare and certain BCBS plans will survive rather nicely, while receiving multi-billion dollar contracts to administer the federal government plan without any insurance (nee, financial) risk. Public option will eliminate competition, not improve it.
@Casey- I love my HSA!
@Scott Thanks for the thoughtful answer- we focus on the radio on Sept 17th- maybe you can join us?
I was suggested this blog by my cousin. I’m not sure whether this post is written by him as no one else know such detailed about my difficulty. You’re amazing! Thanks!