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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Hobby Works | Laurel, MD
Maryland hobby store:
Eroding coverage burdens employees
Insurance coverage key to retaining good people
Having worked for a few big retailers after college, Mike Brey learned the business and wanted to do it well-professionalize the retail workforce with people who knew the product, were happy in their jobs and provided great customer service. He opened the first Hobby Works store in 1992, and has since grown the business to five locations in Maryland.
Almost from the start, he's offered health insurance coverage to keep and retain good people. "One of the first questions people ask is if you provide health insurance," Brey says. "I think it definitely makes it easier to recruit people when you can say, 'Yes, you get good coverage-it's the same coverage the president of the company uses.'"
But even as his business has expanded, Brey's ability to keep workers happy and secure by providing health insurance coverage has eroded. The health plan once cost $100 per person, most of which was covered by the company. Over the years the premium has tripled. Employees have seen their costs go five times higher as they pay more of the premium and face a higher deductible. Brey is bothered by the burden the $1,200 deductible places on his workers, who are putting off preventive care for themselves and their children and avoiding visits to the doctor.
"When we started off we covered everything. Now we offer worse coverage and pay more."
Burden shifted to employees, who can't afford it
One longtime employee has a chronic health condition complicated by Lyme disease. His doctor wants him to try a new drug that could treat the problem. But it costs $5,000, and the man doesn't have $1,200 for the deductible. "This is a guy with a legitimate health problem and a possible solution to it, but he can't afford it," fumes Brey. "What can he do?"
As employees pay more for less coverage, the value of providing a benefit is eroded, he believes. "What happens to the benefit aspect of it when you have to go back to your people every single year with increases? It undermines the value of it as a benefit and something they can rely on."
"We are creating a greater downward spiral. People aren't getting preventive care. We are creating the very situation that's supposedly the problem with the healthcare system."
Mid-size firms stuck in the middle
Increasing healthcare costs are a particular burden to businesses the size of Brey's, a middle ground that's not large but bigger than a mom-and-pop enterprise. "That's where so many people in this country work, and where growth is being held back," Brey says, pointing to healthcare costs as the culprit.
"When we were one store nobody expected us to provide coverage," Brey says. "And if we were bigger we could push back to insurers on terms. But we don't have any leverage."
He worries that his employees will skip doctor visits and medications that could keep them well, leading to more sickness and more expenses. "We are creating a greater downward spiral. People aren't getting preventive care. We are creating the very situation that's supposedly the problem with the healthcare system."
Brey would favor healthcare reform that would improve the situation, even if it was something he would have to contribute to. "If my employees could save money and I could save money and we could cover more people, that's a good plan," he says.