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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Pet Camp | San Francisco, CA
San Francisco pet care:
Rising insurance costs challenge business
Premiums tripled despite healthy workforce
Virginia Donohue and her husband Mark Klaiman worked 9-to-5 jobs while dreaming of opening their own business where they could take their beloved dogs to work with them. In 1997 they took the plunge, quitting secure, full-time employment and starting Pet Camp, a daycare and overnight service for dogs and cats.
The business found a successful niche and expanded to a second location. But in the past year its customer base has shrunk because of the recession. Pet Camp's services are used mostly by people going on vacation or remodeling their homes, and people are spending less on travel and home repair. But what makes the downturn particularly hard is the continuing rise in the health insurance bill for about 15 employees.
Health insurance costs for the small business have tripled since 2000, when Donohue and Klaiman started offering the benefit. The business owners pay $90,000 for the current package, which includes the choice of an HMO or PPO plan. Over time they've had to ask employees to pay 10% of the premium and instituted higher copays. "It's costing us more and costing our employees more, but we're getting less coverage," she says. If the company had kept the more generous plan it had in 2000, the premium would have reached $180,000. The cost increases are difficult to understand, Donohue says. "We are not a high-risk group," she explains. "It's primarily a younger workforce and we haven't had anybody with a serious illness. If we didn't have a healthy employee base I can't even imagine what we'd be paying."
"It's costing us more and costing our employees more, but we're getting less coverage."
Economic downturn coupled with insurance bill is 'disastrous'
The latest premium increase came in July, when the one of the HMO options went up 15% and another 30%. "This is disastrous," says Donohue. "When the bill came we just said, 'This is insane.'"
The business absorbed some of the jump, and some was passed along to employees. "We all just took part of the hit for next year," Donohue says. "But we have nowhere left to go. We already have the highest copay you can buy."
"I have been really hanging on the last couple of years, waiting for reform."
Health coverage needs to reduce costs, be universal
Donohue believes healthcare reform needs to get coverage to everyone and reduce costs for small employers. "I have really been hanging on the last couple of years, waiting for reform," she says.
She's skeptical that an employer-based system can work, given her experience shopping for health plans over the past several years. But short of a complete overhaul that would take employers out of the equation, Donohue would welcome an insurance exchange that is open to small businesses. And a tax credit to make it easier for them to provide coverage to employees, as long as it's simple to use. "That would be a huge help if it's done properly," she says.