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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Hearth Classics | Sandy, OR
Oregon hearth products maker:
Health premiums threaten competitive edge
Double-digit premium hikes make it difficult to cover workers
Hearth Classics started out in 1976 as a father-and-son operation in the family garage in rural Oregon. As the company grew, it expanded many times, ultimately working out of a 34,000 -square-foot facility at the foot of Mount Hood.
This was the solid family business Bruce Richmond bought in 2000. Just as he took over, health care costs began to skyrocket. He has struggled with double-digit increases in health insurance premiums-despite changing insurers and seeking out the most affordable plan every year. He's also ratcheted down on coverage and bumped up deductibles.
"Our premiums have risen every year as our coverage has degraded," complains Richmond. "It has only been by changing suppliers and increasing the deductible that we have been able to continue to offer health insurance."
The deductible on the plan he provides has gone from zero in 2000 to $2,000 in 2008. That year, for the first time, the company stopped paying the full premium, and started passing 25 percent of it on to employees. "That was a very traumatic decision for us," Richmond says.
"As the US has failed to follow most other industrialized countries in ensuring care for all, we felt it was our moral obligation to try to supply medical insurance as long as we could afford to do so."
Competitors enjoy lower overhead
Hearth Classics makes high-quality tile and stone pads for freestanding stoves. Some of its competitors don't provide health insurance, making it difficult to compete on price. Competitors in China have the added advantage of lower wages. "The weighted wages of one of our suppliers from China is roughly the same as we pay just for health insurance alone," Richmond observes.
He recently got a quote on the cost of a current plan whose benefits would equal what the company offered in 2001. It was 138 percent higher than what he paid in 2001. "The price of the products that we manufacture and sell has gone up by about 24 percent" during that time. "Clearly there's a substantial difference in price increases" between health insurance and hearth products, Richmond notes.
"It seems clear to me that the government, businesses and individuals will all have to share the costs."
Health insurance coverage should be extended universally
Richmond believes in providing medical coverage to his workers, and has found it difficult to cut back on benefits and pass along more costs to employees. "My wife and I believe that all people deserve access to quality medical care," Richmond says. "As the US has failed to follow most other industrialized countries in ensuring care for all, we felt it was our moral obligation to try to supply medical insurance as long as we could afford to do so. I do not know how much longer we will be able to continue to offer coverage."
Richmond would like to see the US health care system provide universal coverage and cut the high cost of medical care. He doesn't advocate a specific way to get there, but supports the idea that it will require shared responsibility. "It seems clear to me that the government, businesses and individuals will all have to share the costs," he says.