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.
The longer large companies stay in the health insurance providing game, the longer your suffering will go on. Even though they are not absorbing 100% of health insurance cost increases, they absorb just enough to maintain the status quo.
Since my husband got downsized and we lost our lovely EGHP about 4 years ago, between COBRA payments, Marketplace Insurance (that left us with more than $20000 in balances due), and a year of nonsubsidized health insurance, we have spent approximately $94,400 in healthcare premiums. That number does not include prescription costs and dental work, nor did it cover doctor visits we paid for out of pocket since finding an actual doctor in the Marketplace plan was not an encouraging experience and I trust the doctor I didn’t get to keep.
Since he was downsized and I am unable to work (that major cardiac event mentioned above), our income has averaged $42500 per year.
Please tell me how this is sustainable. If we could barely afford the premiums, we certainly can’t afford a whopping deductible. Any savings we had are nearly gone, we are in our mid-50’s so insurance is expensive and finding a job commensurate with work experience and former salary has a chance between slim and none. We’re tapped out and may simply have to decline to participate next year and eat the penalty. Which is awesome, because right now we’re living on $244.00 per week unemployment.