Health insurance crisis for small businesses
February 22, 2008
Utah Health Policy Project (UHPP) Executive Director Judi Hilman said most small businesses in Utah complain that it is next to impossible to afford health insurance plans for their employees. It’s a catch-22, she says, because small businesses keep the economy thriving, but have a difficult time growing because health insurance rates are so high.
"Under the current insurance business model, small businesses are in trouble in that they don’t have the critical mass to share risk as a group," Hilman said. "Part of the reason for the healthcare crisis and the reason costs are coming to a head [in Utah] is because the economy is dominated by small businesses."
Several health coverage reform bills are being sponsored at the State Legislature this year. Hilman said legislators are addressing health coverage issues, but with the recent discovery that state revenue is $340 million short this year, she said a lot of the plans to fund programs to give low-income families better access to health coverage will have to be put on the back burner until next year’s session.
"We need to do something bold to address our healthcare crisis," Hilman said. "It’s not going to happen this session, but we will make the argument next session."
Hilman talked about HB 364, a bill that would improve access and utilization of UPP, CHIP and Medicaid to the estimated one-third of uninsured workers in Utah who are eligible, but are unaware that they are eligible.
The Health System Reform bill, HB 133, passed the Senate Health and Human Services Committee with unanimous support. The reform committee will work with the Legislature and other big stakeholders in Utah to reform the health care system, a press release from UHPP reads.
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Hilman said a big drawback for small businesses is that health insurance companies raise premiums when employees are considered to be "high risk," which she said is not fair to small businesses that cannot compete with larger companies.
"You can no longer adjust the risk and the cost based on health status," Hilman said. "You’re probably still going to be able to adjust risk based on age and gender, but there is a growing recognition that you can’t adjust rates. We prefer to call [this] patient protection."
Many local business owners and employees in Park City also have expressed their frustrations about paying for expensive health insurance. Some local business owners in town said they can provide their full-time employees with benefits, but said many of their employees cannot afford to pay the percentage asked of them.
"Everyone wants health insurance. Some people believe in it, some people don’t," said Marcus Hernandez, manager for Alaska Fur Gallery on Main Street. "[The government] could help small businesses by making health insurance more feasible."
Many small business employers said it is difficult to have access to and be able to afford group policies through many of the major insurance companies. They said this makes it impossible for them to offer their employees a decent salary, plus benefits, which keep them around longer and helps them work more efficiently.
"It’s astronomical and too cost-prohibitive for small businesses to compete with large corporations," said Alan Ahtow, assistant to the owner at iPaw on Main Street. "Any business wants to attract the best employees, [but] small businesses just don’t have that bargaining power."
Hilman said it is one of the biggest struggles small businesses deal with when they do not have the means to offer health insurance to potential employees. She said, even those businesses that can afford health coverage still hire what insurance companies deem as "at risk" employees, making rates go up.
"I have not met a single small business owner that doesn’t want to provide health insurance," Hilman said. "It’s the luck of the draw. You would like a small business to be able to hire the most qualified person for the job. That means you hire an old woman, [but] she’s at risk. Or, maybe you want to hire someone of child-bearing years, but she carries a risk, too. So that will raise a cost quoted to that business"
Hilman said, in a place like Park City, where the economy is dependent on the retail, hospitality and tourist industries, it is important for small businesses to be able to hire qualified individuals and offer them healthcare coverage. If not, she says, many will go without insurance and that can cause huge problems later on, including taxpayers footing the bill when someone without insurance becomes sick and ends up in the emergency room.
"Until we address that, the uninsured are delaying care or not getting it at all," Hilman said.
One of Hernandez’ employees at the Alaskan Fur Gallery, Syd Eubanks, said he opts not to pay the percentage for health insurance his employer offers because he said he cannot afford it. This has been costly, he said. Last March, he sprained his ankle and he was recently sick for a week, which put him out of work.
"It hurt bad, financially and physically," Eubanks said. "I don’t snowboard hard anymore. I think the federal government could spread a lot of money around in a lot of different ways. That’s a whole can of worms."
Jessica Kaminski, general manager of the Silver Queen Hotel on Main Street, said health insurance is expensive for her employer and the employees and said she knows many employees go without health insurance, which she said poses a danger to them and is unfair to taxpayers.
"It needs to be affordable to everyone," Kaminski said. "It’s not fair for taxpayers to be paying others’ healthcare costs. People should not have to pay other people’s healthcare costs when they can’t even pay their own."
Hilman emphasized the role small businesses play in supporting the economy, and said many people stay in jobs that are below their performance levels because they are afraid they will not be able to afford health insurance plans if they start their own businesses.
"Another area where you see a problem, which is, again, worrisome for our economy, is a growing phenomenon called ‘job lock,’" Hilman said. "You might have a young person who wants to start a new business. Entrepreneurs are responsible for economical growth. But people are holding onto jobs they don’t want and where they’re not performing at their best. We’re stifling economic development when we force people to stay in those jobs and not start new businesses."
Hilman encourages Parkites and small business owners in Utah to contact their legislators and push for healthcare reform in the state.
One of the bills Hilman sees as being of value to the state is HB 364, which would make it easier for low-income workers to be educated about and enroll in the Utah Premium Partnership (UPP), CHIP and Medicaid programs.
She encourages small business owners to stay updated on healthcare reform issues at the Legislature and to contact UHPP with their stories of how their businesses have struggled to afford health insurance for their small companies.
Stories can be submitted by e-mailing Stacey@healthpolicyproject.org . Each day, UHPP puts a new story related to Medicaid dental services on legislators’ desks. Hilman said Medicaid dental services is another problem for Utahns.