Despite efforts of state regulators to provide rate relief, small businesses say they face skyrocketing health care premiums this year, many rising well over 20 percent.
Companies interviewed by the Boston Business Journal saw rate hikes comparable to or higher than last year’s for the same plan, and say the compounded impact of increases over the past few years threatens their ability to create jobs and retain talent.
The state jumped into the issue a year ago when Gov. Deval Patrick ordered the Massachusetts Division of Insurance to reject the vast majority of health insurers’ rates hikes for small businesses, saying they were “excessive.” While the DOI says that the newest health plan rate increases for 2011 are, on average, below 10 percent, officials acknowledge that actual rates for some of the smallest companies can still veer off into the stratosphere.
“This is a year after they said they were going to fix it, and that increases were going to be in the single digits,” George Carey, CEO of Finz Seafood Restaurant in Salem, said. “Ironically, before health reform, my workers had a better plan and paid less money for it,” Carey said. Carey said he’s discouraged that he must now offer workers a plan with deductibles of $2,000 for individuals and $4,000 for families, in order to stem the tide of rate hikes, and fears it will hurt his chances of keeping good workers as the economy improves.
Despite efforts to mitigate costs, Carey took an increase of 18 percent this year for a Harvard Pilgrim Health Care plan that covers nine workers. That’s the same as last year’s increase, after he increased deductibles to avoid a 27.8 percent hike. “If my investments compounded like my health insurance costs, that would be great,” he said.
The state acknowledged its efforts have had limitations. “Even though government action has saved small businesses $106 million in premiums, more must be done,” Division of Insurance Commissioner Joseph Murphy said. Murphy explained that the DOI only controls base rates, and current rules allow insurers to tack on additional costs related to geography and demographics, that can swell premiums by up to 50 percent in one year, in rare instances. The DOI is finalizing a raft of new regulations, one of which would cap rate add-ons to 15 percent above the base rate. But even if the base rates are held under 10 percent, some very small firms could still see premium jumps of as much as 24 percent.
For some small business owners, controlling rate increases has been an exercise shifting more costs to employees. “If the price of butter rises, then I shop around,” Joanne Chang, CEO of Flour Bakery said. “I have a limited ability to do that with health care.” Chang’s three Boston bakeries and one diner are organized into three separate companies, meaning that she has three different renewal periods and three different rate negotiations. In her most recent plan renewal, for two of the bakeries, she was quoted a 32 percent increase to her Blue Cross Blue Shield of Massachusetts plan. This was more than double her 2010 same-plan rate hike of 14.3 percent.
It is still very difficult being a small business owner. We just want to do our jobs and not be wasting time or money with changing health care costs, rules and regulations. What is all this going to look like when Obamacare really does kick in?