Business Owners Decry Health Insurance Hikes

Small business owners are mad. Their health insurance premiums are rising anywhere from 17 to 51 percent. The cost escalation prevents them from hiring new workers, forces them to consider moving out of state and incentivizes them to discriminate against older employees.

That's just some of what Joseph G. Murphy, the commissioner of the Massachusetts Division of Insurance, heard at a hearing that drew about two dozen people to Fitchburg State College Monday morning.

The hearing was the last of six such meetings that the division held across the state as Gov. Deval Patrick's administration considers action to curb the skyrocketing premiums.

Nothing To Spare
Kathleen Mills, a self-employed HR professional from Leominster, said her premium with Fallon Community Health Plan is set to rise 26 percent in April. She said her clients, which are mostly small businesses, are seeing the same thing. With most of the companies making very little profit, she said she doesn't know how they can afford the higher payments.

"They don't have enough money to sustain that type of increase," she said.

Cynthia Boucher, who runs Commonwealth Water Purification Co. in Winchendon with her husband, said she bought a Blue Cross Blue Shield plan when the company offered a relatively low rate in 2008. In the fall of 2009, she said, the company raised the premium 49 percent. She switched to Tufts and was relieved that the premium cost went up "only" 17 percent.

"That's how jaded we are," she said. "I thought ‘seventeen percent-what a bargain.'"

After paying $15,000 in premiums, Boucher said, her family still had to spend another $7,000 out of pocket to pay for deductibles and uncovered expenses like her daughter's wisdom tooth extractions.

Boucher said her company would like to add more staff as the economy improves, but the cost of providing insurance for more people would be prohibitive.

Kris Specht, managing director of Comrex Corp. in Devens, said her 20-employee company had a choice between a 17 percent premium increase to keep its current Tufts plan or a 10 percent increase to switch to another Tufts plan with a "ridiculously small" list of hospitals that employees could use.

Price Of Experience
Specht said that in a previous year the company's premiums were set to go up 12 percent but ended up rising only 1 percent after a 51-year-old employee left. That forced her to think about how the age of her new hires would affect premium costs for the company and for other employees, she said.

"How can I hire somebody and not consider their age?" she said. "I could fire a guy who's 60. That would fix our problem for this year."

Kenneth R. Van Sciever, the president and sole employee of Data Power of New England Inc., said his premiums were set to rise 51 percent in April. Because his wife has had two cancer surgeries, he said, he can't afford to move to another plan. He said he ended up sticking with the same insurer but reducing his family's coverage and still saw a 38 percent premium hike.

"I think there's a lot more people like me out there," he said.

Matt Ward, the owner of Central Mass Web Design in Gardner, said he doesn't provide health insurance for his employees. And with the stories he's heard from other business owners about premium hikes he doesn't expect to do so. But he said that means he loses employees to larger companies that do offer insurance. And it means he can't hire more workers, since state law requires businesses with 11 or more full time equivalent employees to offer insurance.

"I've actually considered instead of being Central Mass Web Design being Southern New Hampshire Web Design," he said.

Representatives of the insurance industry also spoke at the hearing, generally agreeing with the business owners that premiums are rising too fast. But they said they are merely passing on the rising price of health care services.

"Health care costs are rising at a rate that's not sustainable," said John Sullivan of Blue Cross Blue Shield of Massachusetts.

Murphy said the division is now reviewing insurance companies' proposed April rate increases and will determine in two to three weeks whether they are reasonable. He said the state is also looking at longer-term proposals to improve the affordability of health insurance.