Only 30 days in advance of my April 1st renewal date I got an email informing me that my company’s medical insurance rates are increasing 16%. For a $2000 deductible plan (we do have a HRA underneath) it now costs $20,736 per year for family health insurance coverage. For an employee making $40,000 per year this is 50% of this employee’s payroll cost. If I asked this person to pay for 100% of the increase this would be equal to a pay-cut of 7.35%. This is not sustainable. What is worse is that I have so little control over the cost and I see very few companies really trying to do anything about it.
I have mentioned in previous articles how the two biggest problems the U.S. is facing economically is the cost of healthcare and college education. I get the double whammy as a business owner who pays for 75% of my employee’s healthcare and as the father with two kids in college. I can’t win. “Thank you, sir, may I have another?” (Animal House 1978)
Between the cost of healthcare and college something has to give. Personally I think we are reaching the breaking point for employers and employees. What can be done? Do I not hire people who need health insurance? Do I hire only young people that have lowers costs? Do I start hiring all part-time people? Do I move my business to a lower cost State? Do I outsource some things overseas? One thing I know is that a business owner will do what he/she needs to do to survive so all these tactics will be used. I have always been a believer that if you show me a law or rule I can predict how people will react. You increase the cost of health care on a business and I can tell you what you will get.
I have been in or around the health insurance business since 1986. I delivered my first medical renewal with an employee rate that exceeded $100 for an employee in that year. In fact, I remember the exact client meeting like it was yesterday because the business owner’s father was dying of cancer and now I was delivering more “stress”. He was angry. I am angry too.
I am mad because this problem has gone on long enough and the industry has really done nothing about it. I am mad because I will probably have to switch insurance companies again for the 6th time in 15 years. It is inconvenient. It is stupid. I have had the same doctor for 15 years but my insurer has to change every 2-3 years. What a waste. I am mad because I will have to deliver bad news to employees and then wonder if any of my employees will start looking for a job with a company that pays more for health insurance. It is a business risk.
Here is my message to the industry. Fix it. Or someone else will. And I am no longer going to take it anymore. I am sure many others feel the same way.