Small-business employers know the insurance and health care worlds are turning. Where they are headed ”“ with or without a new federal health care program ”“ the cost will be dear.
“It”™s tough,” said Christopher Peck, partner of Creative Benefit Planning in Stamford. “There”™s still double-digit inflation in health plans; you”™re seeing 15 (percent) and 20 percent increases. For the smaller employers, they”™re community rated for the most part, so they don”™t have too much say in the rates; it”™s essentially, ”˜What plan design can we look at?”™
Peck said because of the further consolidation in the marketplace, with HealthNet and Oxford being acquired by United Healthcare, there are two fewer players and therefore fewer options for small businesses.
“This year anyone with HealthNet is going to have to go to United”™s platform, or if they”™re on their fifth year they”™ll have to go with the Oxford platform,” said Peck.
In Fairfield County the health care insurance options are Aetna, Cigna, United Healthcare and Anthem Blue Cross-Blue Shield and Connecticut Healthcare.
“Some states just have one or two options,” said Peck. “We”™re better than some in that way, but based on what happens with reform that could slim down even further.”
Peck said that because there is an increase in mandates every year, premiums continue to rise.
“The reality is most people seem to be out of touch with exactly how expensive health care has gotten in our area,” said Anthony Domino, president of Associated Benefit Consultants in Rye Brook, N.Y. “We”™re spending a lot of time talking with clients about what we call ”˜high low plans”™ for rank and file and young people, and letting the executives and those with large families buy up. I think the government plan is headed in that direction. They”™re hoping that the tax on the buy-up can cover the blanket on the base level. I think that it”™s a big opportunity for a variety of folks to be considering, but there”™s a lot of moving parts here. It can be confusing and hard to grasp.”
Domino said small businesses would be best served by planning for inevitability and figuring out exactly what works best.
Peck said people are for the most part still insulated from the true costs of health care.
“If you go shop for a house or shop for a car, you can compare features,” said Peck. “If you go to the doctor and they tell you that you need an MRI or CAT scan, you”™re not really able to shop it out, you”™re going on the advice of your doctor. We”™re in a unique position in America, that we have access to the greatest care out there, but between us having access to the greatest doctors, treatments and drugs, and general practitioners are struggling.”
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According to Peck the private health care market covers between 140 and 150 million people, the public plans that cover Medicare and Medicaid cover 80 million people, and there are about 40 million uninsured people.
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“The private arena or marketplace is already subsidizing the lower reimbursements that the providers get from Medicare and Medicaid,” said Peck. “Also the uninsured, obviously if they show up at a hospital they get treated, but that has to come from somewhere. We”™re already paying for a lot of this now; we”™re just restricting how we pay for it. I don”™t believe the answer”™s in bigger government or more bureaucracy.”
Peck said he doesn”™t think there will be much of a sense of what”™s in the bill until it”™s signed into law.
“Nobody knows what to think of the Obama plan,” said Domino. “It”™s so much in flux. It makes it really hard to give a forecast for the following year.”
Peck said the cost estimates of the Congressional Budget Office, whether it”™s 800 billion or 1.2 trillion, are going to be way below what it actually is. He said he sees fees being added to carriers now, which in turn is added to employers”™ premiums.
“These are taxes that every employer is going to have to grapple with to try to stay compliant,” said Peck. “They”™re going to start paying for it now, but the benefit of those reforms, which may be the guarantee issue for everyone or the exchanges that they might form, aren”™t going to be in effect until 2013 or 2014. You have 10 years of paying for it, but only six years of benefit, and that”™s just the estimate. Whatever the shortfall is will require tax revenue and we”™ll have to raise taxes.”
Creative Benefit Planning works with about 300 clients in the tri-state area.
“Clients have had salary freezes, layoffs and are struggling with the already high increases,” said Peck. “If we”™re trying to drive new jobs, and most new jobs are created by small companies, don”™t burden those small companies with additional taxes, bureaucracy and additional mandates. I feel as if they”™re going to get hit twice.”
Peck said most businesses have already had to stay lean and to get through the issues of health care in the next year they may just need to set some expectations.
“Very few clients are not concerned with what”™s going on,” said Peck. “Most of them are feeling the pinch; they”™re going to feel a greater pinch. Unfortunately, it”™s going to lead to people losing jobs, salaries staying flat, or even some that”™ll say I can”™t continue to do this anymore. ”
Peck said as the reform gets voted on and passed small businesses and employers should be paying attention to how they define small employers and how they define fulltime employees.
“There will be some things that small employers will be excluded from,” said Peck.
Meantime, in neighboring Westchester County, N.Y., new County Executive Robert P. Astorino said last week the county”™s health care bill rose from $67 million to $149 million in the last 10 years. In his first legislative initiative, he is seeking $1 million in annual savings via employee contributions to their own coverage.
