Small business owners and entrepreneurs throughout the US are facing impossible choices because of the skyrocketing costs of health insurance premiums, and, in many cases, the lack of access to coverage. Here are some of their stories.
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Burroughs-Ross-Colville Co.: McMinnville, TN
Tennessee lumber mill:
Rising insurance costs worsen recession's bite
Mark Jacobs
Burroughs-Ross-Colville Co.
McMinnville, Tennessee
Founded: 1873
Employees: 40
Health coverage: High-deductible PPO
Slow business, high premiums force layoffs
Times are tough in the scenic rural Tennessee region where Mark Jacobs helps run a longtime family business producing wood products. Jacobs is reminded of just how tough they are when he contemplates the sawmill standing idle and the four dozen workers he's had to lay off in 2009.
For the approximately 40 people who are still making wood products at the mill, the health insurance benefit has been eroding over the past few years. "One thing we've prided ourselves on is being able to provide good benefits," says Jacobs. "We'd always paid two-thirds of the medical insurance and two-thirds of the dependent coverage."
As premiums started rising, the mill's management found ways to keep employees from feeling the pinch too much, such as doubling the plan's deductible and reimbursing half of that amount for employees who used it. But over time, the deductible kept going up, pushing more expense onto employees.
This year the premium rose 22%, forcing the company to raise the deductible to $2,500 and potential reimbursement to $1,250. "We've thrown $750 additional on people who are making $9, $10, $11 an hour. It's just killing us that we're having to do this to our employees."
By passing along some of the cost, the company was able to keep its own piece of the increase down to 6%. But even that's hard to sustain. "In this economy, we can't afford 6 percent," Jacobs says.
"One thing we've prided ourselves on is being able to provide good benefits. It's just killing us that we're having to do this to our employees."
Insurance essential to keeping good employees
The sawmill could drop insurance as a benefit, but Jacobs believes that would be counterproductive. "Every so often somebody in the office will say we just have to stop doing healthcare," Jacobs relates. "But then we'd lose every good employee we have. We're not going to do that."
Already he worries about how much employees are paying out of pocket for medical care with the coverage they do have. "The amounts that I'm putting over on them are just almost impossible to maintain unless a spouse has a really good job or some other good source of income."
"We're literally on our last leg trying to stop the bleeding."
Tough times prompt owner to get political
Jacobs says he's never been particularly active politically, but responded when he was asked to visit Washington DC to help convince lawmakers of the plight of small business and high healthcare costs. "I didn't go with a partisan message or to tell them the solution," Jacobs says. "I just told them I have a big problem and I need help."
He'd like to see Congress make the insurance market more competitive since he's in a market that is dominated by one insurer. "It sounds like the exchanges would help that," Jacobs says. "We need to be pooled because we don't have any younger people to offset our (older employees). And we need a public option or something like it that would generate competition."
Jacobs isn't picky about the details: His company just needs some relief for the bottom line, which has taken serious hits by the downturn in the economy. "We're literally on our last leg trying to stop the bleeding," he says.
