It's not much of a consolation for the northern Nevada small business owners that the rate of increase in health insurance plan premiums slowed for the second consecutive year.
Premiums, according to the 2005 Annual Employer Survey Benefits released last month by the Washington, D.C.-based Kaiser Family Foundation, increased an average of 9.2 percent, the first time after four years that growth rates fell below double digits.
Cheryl Blomstrom, the northern Nevada representative of the National Federation of Independent Business, says small business owners don't view the slowing rate of increases as a positive.
"Single digit, but barely single digit," is the common refrain she says, but the increase has outpaced growth in worker's wages by more than three times and the rate of inflation by two and a half times.
The increase has forced several small businesses to make choices: Reduce benefits, offer high deductible plans, go for plans that cover only financial catastrophes or embrace consumer-driven plans such as health savings accounts and health reimbursement arrangements.
And in some cases, employers are forced to take the extreme measure of laying off employees or putting a stop to further recruitment.
Gil Grieve, president of Reno-based Concours Body Shop Corp., believes in paying a large share of the health insurance premiums for his 30 employees.
But he has had to pass part of recent cost increases on to his 30 employees.
Earlier, he says, his company paid 90 percent of an employee's share and 70 percent of the spouse's share of the premium in the Hometown Health HMO-PPO plan.
The year's increase forced Grieve,with great reluctance, to reduce his share to 80 percent for employees and 60 percent for spouses.
The slowdown in premium increases is no reprieve for him, he says, particularly in the context of rising costs of doing business.
The large increases in fuel costs in the past year have had a tremendous impact on his business and increases in health premiums are an added cause of worry.
"I'm very frustrated with the health insurance industry, but I've no choice.
I've to pay for the benefits.
That's the way to retain my employees,"Grieve says.
However, some businesses such as NorthStar Investors Inc.
and its subsidiaries have been able to keep the costs down by using a broker a Reno company called Employer Benefits which does the shopping on an annual basis.
The broker attempts to keep benefits stable while controlling costs, says Scott McCallum, the vice president of operations at NorthStar.
NorthStar and its subsidiary companies have a total of 19 employees, and it pays 100 percent of the premium costs for a HMO-PPO plan for its employees.
Coverage for spouses and dependents isn't paid by the company.
"Increases have been minimal or certainly not at what the rest of the market is showing," says McCallum.
"If there are no increases,we try to stay with the same (insurance) company we are with and if there are better deals,we consider the interruption of switching."
According to the Kaiser survey, three in five firms (60 percent) offered insurance coverage to workers in 2005, down from 66 percent in 2003 and 69 percent in 2000.Among the firms that do not offer health benefits, the study adds, most were likely to cite "cost as a key factor,with nearly three in four (73%), saying high premiums were 'very important' to their decision." For Grieve, it's a helpless kind of a situation where, he says, the insurer regulates and dictates." I've got to take what they offer.
It's an unfair trade."
And to address precisely this concern of small business owners, the NFIB has been working to promote a federally authorized Associational Health Plans which would allow small businesses to band together, even across state lines, and have the buying power that large businesses have.Oversight of AHPs would shift from state insurance regulators to the U.S.
Department of Labor.
"It gives you the kind of numbers where the insurance companies starts talking to the small businesses more rationally," Blomstrom says.
The U.S.House of Representatives passed an AHP bill but it is stuck in the Senate, says Blomstrom.
It's drawn opposition from insurers and the National Association of Insurance Commissioners.
Grieve is in favor of such a plan as it allows him to possess the clout to face up to the insurers.
But until AHPs become a reality, he is not sure what further steps he has to take to tackle the annual increase in health costs.
He does not rule out further cuts in the company's share, moving to a higher deductible plan or other options.
Subsidies in works for low-wage uninsureds In the last legislative session, Nevada lawmakers approved a state subsidy of up to $100 a month for health coverage of uninsured, low-wage workers.
Many of those workers are either not offered health insurance by their employers or cannot afford to pay for their share of the premiums.
According to a National Independent of Small Business national survey, over 56 percent of small businesses don't provide health insurance and the percentage in Nevada is slightly higher.
Under the bill (AB 493) that takes effect in July 2006, employers would pay half the cost of a health plan the cost would be reduced by the amount of the subsidy and employees would pay the rest The plan is targeted toward small businesses with two to 50 employees.
Eligible workers must meet income criteria.
A typical health insurance plan in the state costs $300 to $350 a month, according to experts who testified before lawmakers.
"If the plan is less expensive, the employer continues to pay 50 percent.
If the employee's overall share comes to less than $100, we will still subsidize up to $100," says Michael Willden, director of the Nevada Department of Health and Human Services.
The Department of Health and Human Services is coming up with a marketing plan in spring, says Willden.
The department plans to approach small businesses, identifying them who has insurance and who doesn't but it will be "basically a first come first serve." The money for the program comes from federal, state and county sources.
The program is set for five years, with enrollment to be phased in over several years, beginning with 2,000 individuals in the first year of the program and increasing to 8,000 by the fourth year.
If the program works, state officials hope it will get long-term approval from federal agencies.
Cheryl Blomstrom, northern Nevada representative of the National Federation of Independent Business, is not too sure the subsidy program will be a hit with small businesses.
While some businesses are likely to go for it, she says others will be concerned about offering something that might go away if the federal government does not approve it long term.
The plan does not take into account increases in premium costs.
"If premiums keep going up then we might have to take a look at it.
Maybe $100 won't do it.
Then we may need to serve less people and able to pay for the higher rates," Willden says.
"We had to start somewhere and we felt that the $100 subsidy would be a good place to start."
