Paying for health care? Less is more.

The saying “less is more” holds true these days, especially when it comes to health care. Though long, the following article accurately depicts the issues many small employers and individuals face each year when purchasing health insurance. Perhaps you are experiencing the same issues in your annual insurance enrollment.
Philadelphia Inquirer – Online
Stacey Burling
Talk to just a handful of small businesses about buying health insurance over the last few years, and the narrative quickly starts to sound familiar.
It boils down to paying more and more for less and less. Oh, and passing on more of the cost to employees, who aren’t exactly rolling in raises these days.
Increasingly, small businesses have given up, fueling the rise in the ranks of the uninsured and the debate in Washington about how to change health insurance so that more of us can afford it.
Consider Bob & Ron’s World Wide Stereo, which has stores in Montgomeryville and Ardmore. Owner Bob Cole has been providing insurance for 31 years.
At the beginning, he said, “I paid for it 100 percent. I did their families. I did everything. Over the years, I’ve cut back that support because of the extraordinary expense.” Cole still provides family coverage for longtime workers, but new ones pay the full cost of dependent coverage.
Over the last five years, the company’s contribution for health insurance has grown from 0.7 percent of total revenue to 1.1 percent. During those years, while the overall inflation rate never rose above 4 percent, the company’s health insurers – first Aetna Inc. and now HealthAmerica – came asking for rate increases of 23 percent, 27 percent, 9 percent, 20 percent, and, this year, 38 percent.
As a result, Bob & Ron’s, which covers 41 employees, has reduced what its health policy covered almost every year. It switched insurers in 2008.
“Every little change you make to save a little money reduces the quality of the coverage your employees get,” said Patrick Moran, director of operations, finance, and human resources.
Insurers say their prices track increases in medical costs, which are rising because of wider use of expensive technology and drugs.
While 98 percent of companies with more than 200 workers still provide insurance for employees, the percentage at smaller firms has fallen, according to the Kaiser Family Foundation. Most of that drop is in the smallest companies, those with fewer than 10 workers. In 2001, 57 percent of them provided insurance. Only 46 percent do now.
Small businesses say cost is their biggest insurance problem. According to Kaiser, small businesses actually pay slightly less per employee for insurance, but the plans often have higher deductibles. In testimony before a Senate committee, MIT economist Jonathan Gruber said small companies paid as much as 20 percent more for comparable plans because of insurers’ higher marketing and administrative costs, including the cost of figuring out how to avoid insuring companies with sick employees. Small firms often pay broker commissions, which amount to 4 percent to 11 percent of premiums. Local brokers said commissions here, which are paid by insurers, were more like 4 percent to 5 percent. Some insurers plan to switch to flat fees.
 Price volatility in the small-business market is what most concerns Randy Rohrbaugh, a Pennsylvania deputy insurance commissioner. Because many insurers base prices on the age and health of employees, one serious illness or a few birthdays can make a big difference in the bill.