Medical insurance is in critical condition
Owners of small- and medium-sized businesses in the Hudson Valley are dropping health insurance for their employees, unable to afford the high cost of premiums.
Health insurance has become the leading challenge for businesses, small and large. That fact was confirmed by a survey conducted by The Business Council of New York State (BCNYS), a business coalition based in Albany, among its members last fall asking them to rate their primary issues of concern. A majority reported that the cost of employee health insurance was number one.
Local and regional chambers of commerce offer their members a variety of health insurance options. But with premiums rapidly increasing, many businesses are finding these options unaffordable. The Orange County Chamber of Commerce reported premium increases from 10 percent to 35 percent over the past few years. Many businesses are simply dropping out of the plans, said Debbie Bogdanski, the chamber”™s vice president of government initiatives and special projects.
It”™s a pattern repeated around the region. “Most small businesses don”™t subsidize health insurance for their employees, because they can”™t afford these premiums,” said Ron Forehand, CEO and president at the Hudson Valley Gateway Chamber of Commerce, in Peekskill. “They allow a buy-in for their employees.”
Eileen Hayes, supervising insurance attorney at the Health Bureau of the New York State Insurance Department, said the number of insured small businesses in the state is 880,000 ”“ a drop from 1 million in 2002. (She noted that “to some extent there may have been some recategorization of the groups,” which would partly account for the discrepancy.)
Chamber representatives said high-deductible plans, which have been introduced in the past couple of years, haven”™t become a popular alternative because the cost is still considered too high: The premiums are lower, but not priced so low that the higher amounts a participant would have to pay out of pocket for health care are worth it.
“It”™s a significant cost issue, which cuts into your profit margins,” said Bogdanski. “It also is a significant factor when companies are looking to recruit and retain their work force. Individuals competing on a national level for engineers, technicians and other highly skilled workers have no choice: The only way to recruit and retain employees is to put the full benefits on the table.”
Feeling the pain
New York businesses are at a particular disadvantage, according to Bogdanski, because the state has the highest premium rates in the nation. It also offers the highest levels of coverage, thanks to numerous mandates ”“ the BCNYS estimates there are more than 40 of them ”“ that are passed by the state Legislature each year. And therein lies a serious problem, said business advocates.
Mandating that state insurance plans include coverage for such items as hospice care, ambulance service and treatment by a chiropractor have increased the cost of insurance significantly, they said. According to The Employer Alliance for Affordable Health Care (EAAHC), based in Albany, the 12 most common mandates have cumulatively increased the cost of insurance by as much as 30 percent. Larger employers have the option of self-insuring under federal law, making state mandates inapplicable to their benefit packages, so it”™s the small employers and the self-employed who are hardest hit, according to the EAAHC.
The latest mandate to be passed was Timothy”™s Law, which requires parity for mental health, meaning that insurance plans must provide coverage on what was formerly an option. Passed at the end of 2006, the law also set aside $100 million of state money to help subsidize the mental health coverage costs of small businesses with two to 50 employees, a welcome provision, noted Mark Amodeo, director of corporate affairs at BCNYS.
Healthier choice?
The ability to buy into a lower-cost, more-basic health insurance plan is offered under a state-subsidized program called Healthy New York. Launched in 2001, under the state”™s Health Care Reform Act of 2000, Healthy New York is eligible to small businesses with 50 employees or less, sole proprietors and individuals. Most mandates have been excluded from this coverage, with the exception of home health care, post-operative and post-surgical home benefits, according to Hayes at the state Health Bureau.
The program reimburses health plans for 90 percent of claims paid between $5,000 and $75,000 on behalf of a member each year, a stop-loss mechanism that reduces the premiums by 27 percent compared with private health insurance, Hayes said.
For a small business to be eligible, 30 percent of employees must earn $34,000 or less (the amount will increase to $35,500 July 1) and the company can”™t have provided health insurance in the past 12 months. At least half of the employees have to participate in the insurance, and the employer must contribute at least 50 percent of the premium. Businesses can also deduct the cost of the premiums from their taxes.
If a business chooses not to participate, individual employees can buy the insurance directly. People at lower incomes ”“ 150 percent of the federal poverty level ”“ would qualify for the state”™s Family Health Plus, with the next tier being Medicaid, for people with incomes at the poverty level.
Sole proprietors qualify for Healthy New York if their gross household income is below 250 percent of the federal poverty level, if they”™ve been employed within the past 12 months, and haven”™t had insurance during that time period.
While Amodeo said the BCNYS sees Healthy New York as a model for affordable health care for small businesses, “a core gripe of ours has been that it is not available to employers who were previously offering health insurance. This amounts to a case of punishing those who had been doing the right thing and rewarding those who have not.”
Other parties have also been pushing for a less restrictive program. State Sen. William Larkin, R-Cornwall, for example, has repeatedly introduced legislation that would make Healthy New York available to all, but the bill is consistently shot down by the Assembly, according to Steve Casscles, the senator”™s counsel. “The Assembly would like to make everything Medicaid,” he said. He added that Larkin”™s fear about having a single state-run insurer is that health care would ultimately be more expensive.
In 2007, the state budget for Healthy New York was $123.4 million, a $14 million increase over 2006, according to Hayes. As of the beginning of April, there were 139,210 individuals enrolled, of which 30 percent were small businesses and 16 percent sole proprietors. In Putnam, Rockland, Orange, Dutchess and Ulster counties, there are currently 4,876 small-business participants and 3,247 sole proprietors.
Some qualifying businesses said even Healthy New York was too expensive. For the Hudson River counties, the premium for a basic individual plan including drugs ranged from about $218 to $319 per month; the cost for two adults averaged about $540 and for a family, $778.
The entire situation is embodied by Walden”™s Multimedia Service Center owner Rich Rossi, who has battled with insurance for years, gaining it and losing it and, finally, losing it again. He said the Medicaid maze was impenetrable for his family. “We”™re always looking for a plan,” he said.