By Katie Kerwin McCrimmon
WESTMINSTER — Every year, Mark Henault, co-owner and chief financial officer for a thriving Colorado business, spends a solid month researching and selecting health insurance plans for the next year.
It’s a painful job. First there are the inevitable cost spikes. Last year, one employee was hit while riding his motorcycle. It wasn’t a catastrophic accident, but with a short hospital stay and follow-up visits, the bills quickly soared to $180,000. Henault’s business was hit with a 100 percent increase.
“One bad year and you’re dead,” said Henault.
So much for the previous year’s plan. He couldn’t accept a doubling of prices. Instead, he shifted gears and found insurance through a “professional employer organization” that brings companies together to get better benefits. Henault then has to make sure that each employee fills out detailed health questionnaires that can be more onerous than tax forms. People with illnesses sometimes have to go back seven years reconstructing doctor visits and medication regimens. If they exclude one detail, they might not be covered.
Henault’s company, Syncroness, designs and engineers high-tech products from toys to rocket parts and medical equipment. Henault could be spending his time generating new business, but to attract the cream of the crop workers he needs, he must have a top-notch health plan. That can be a challenge for a small business that just this year surpassed 50 employees, now boasts 65 and could have added a dozen more jobs if health costs weren’t so high.
Henault is hoping the U.S. Supreme Court upholds the health reform law for the simple reason that he needs more health insurance choices and a streamlined process.
“Health care is now our second expense behind salaries. It’s crazy. It’s starting to get stupid expensive. We’re hoping the health exchange will benefit us by giving us bigger group-buying opportunities,” he said.
From the White House to the Capitol buildings in both Washington, D.C. and Colorado, elected officials and health policy experts are eagerly awaiting a ruling from the U.S. Supreme Court that could be the most significant in decades. The justices are expected to rule within days on whether President Obama’s landmark health legislation, the Affordable Care Act, is constitutional or not. The justices could invalidate the part of the law that requires all individuals to buy health insurance or they could invalidate or uphold the entire law. In the U.S., businesses have for decades provided health care to employees. Now business leaders are at the center of the debate.
Employees need motivation to cut costs
In a giant warehouse filled with boxes and shipping supplies just off Interstate 70 in northeast Denver, Jim Noon, owner of Centennial Container, has the opposite point of view. With just 12 employees, his health insurance costs also are soaring.
But he thinks the Affordable Care Act is the problem, not the solution.
First, there’s the name. Noon think it’s a joke since it does nothing to make health care affordable.
But, second, he thinks the more government gets involved in health care, the less motivation people have to shop for less expensive care.
“When everything is free once you’re sick, if a guy gets up at 2 in the morning and goes to an emergency room and that’s a $10,000 visit, that’s part of the problem. President Obama’s way of fixing it is to make it totally free for everyone,” said Noon. (Noon’s representation of the act does not acknowledge the requirement that everyone carry health insurance.)
Meanwhile, business owners like him are forced to pay ever-increasing costs that he fears will only rise if the law is upheld.
“I am not one of those people you’ll hear say, ‘Let’s go back to the good old days before we had health care legislation.’ The good old days were really, really bad,” Noon said.
Year after year, as health costs have risen, Noon, has been able to offer less to his employees. He used to cover 100 percent of the health insurance costs for all of his employees and their families.
“Then we took the children off. Then we took the wife off. Then we raised the deductible,” he said.
Now employees can pay to get their spouses and children covered, but Noon said he has “no takers” because it’s too expensive.
What few people realize is that health costs bump up at certain age levels. Noon has found that when an employee hits a new age category, like a 24-year-old turning 25 or a 59-year-old turning 60, there’s a giant increase in insurance costs.
“I will get a renewal and there will be a 40 percent increase. Health insurance costs (on average) only went up 7 percent, but seven of my 12 employees will have hit a new age bracket and our costs go way up,” said Noon.
He created his company 27 years ago with the idea of finding problems and turning them into solutions. He buys cardboard and shipping supplies that have been misprinted or are somehow defective. Then he fixes the cardboard — essentially recycling it before it gets recycled — and resells it to other shippers who can use it.
His solution for the health care mess?
“I’m hoping they strike down the whole law,” Noon said. “It makes a bad situation totally socialist.
“Then we need to send everybody back to the drawing board to fix it. We have to have more personal involvement (in paying for health care) or the cost is just going to be horrible,” Noon said.
Small businesses want help
A new survey of 300 Colorado small business owners conducted for Kaiser Permanente predicts that more small businesses will offer health insurance to employees if they have access to a competitive health exchange, as planned under the Affordable Care Act (ACA) in 2014. Colorado also passed its own law creating the exchange, so even if the Supreme Court invalidates the entire law, Colorado’s health exchange will still be in place, but funding for it that is set out in the ACA could be jeopardized.
Currently in Colorado, only about 37 percent of small businesses offer health insurance to their employees. Another 15 percent give insurance to some, but not all employees. The survey found that with the help of a competitive exchange, nearly 60 percent of employers said they would offer health insurance.
Employers are eager to offer employees more wellness programs and plans that can help with disease prevention, according to the survey.
“These findings support the notion that the state health insurance exchange can provide small employers and their employees the same options and benefits that large companies now enjoy,” Kaiser Permanente Colorado Group President Donna Lynne said in a written statement. “This marketplace can give them more choice of plans and make it easier for them to offer their employees insurance.”
Choice of insurance carriers is important too. Sixty-seven percent of small business owners planning to offer benefits in 2014 want employees to be able to choose among multiple insurance carriers.
Along with choices, small businesses want help in reducing the administrative burdens of providing health insurance. Specifically, the businesses that were surveyed in April and May said they want Colorado’s health exchange to handle enrollment and provide owners with a single, consolidated bill, regardless of the number of different insurance carriers employees select.
Dueling views on what small businesses want
As the nation awaits the ruling from the Supreme Court on the future of health reform, lobbyists have released clashing studies on what business owners want.
A left-leaning group called that Small Business Majority released survey results this month saying that half of small businesses want the Supreme Court to uphold the ACA while only one-third want it overturned.
“Contrary to popular belief, small business owners do not want the high court to throw out the Affordable Care Act,” John Arensmeyer, CEO of the Small Business Majority, said in a written statement. “They see this law as helping everyone have coverage and bringing down health care costs—something that has been one of their top concerns for years. We hope Supreme Court justices understand how important this law is to small businesses who need relief from high health care costs.”
The Small Business Majority survey, like the Kaiser poll, also found strong support for health exchanges.
On the other side is the National Federation for Independent Business (NFIB), which along with the State of Colorado, is a lead plaintiff in the lawsuit that seeks to overturn the health law.
NFIB Colorado Director Tony Gagliardi says that NFIB surveys have found that more than 90 percent of small businesses want the health law overturned.
He said small business owners fear the law will cost them additional taxes and that few small businesses will qualify for tax credits under the law.
“There are a lot of hidden taxes (in the ACA),” Gagliardi said. “The act does nothing to lower insurance costs and does nothing to lower the cost of health care. Even the administration cannot show where this act will lower the cost of insurance and lower the cost of health care. What they’re relying on is the smoke and mirrors of subsidies.”
As essential as French bread
Back on the front lines of the small business debate, Robert Tournier is focused on dinner.
For 33 years, Tournier has owned Le Central, a restaurant just south of downtown Denver that has survived in good and bad times by billing itself as “the affordable French restaurant.”
Tournier has always provided health insurance for all his full-time employees. To him, health coverage is as essential to life as a crusty baguette is to a proper meal.
“I’m all for health insurance,” Tournier says somewhat mystified that there is even a debate about the question or about what the Supreme Court should rule.
He thinks the individual mandate is absolutely key and hopes it will be upheld.
“If everybody has to have insurance, then it will cost the same, just like workers’ comp or car insurance. Health insurance is a must.”
Tournier said his health costs have increased dramatically and he’s had to ask employees to pay more. He covers about 60 to 70 percent of the health insurance costs and many employees now skip the coverage rather than paying for their own share.
“Fifty percent don’t want it because they cannot afford their share. It’s a big burden,” Tournier said. “When I started the business, I used to give insurance to everyone. Now insurance is going insane. The increases don’t make any sense. It doesn’t match the cost of living (increases).”
Tournier said there have been times when he has had French employees for whom it was cheaper to get health insurance in France, even while working in the U.S., than to be covered in the U.S.
“I do what I can. It’s a big chunk.”
Better off scrapping the law and starting over
For Harold Jackson, executive chairman of Buffalo Supply Inc., a distributor of high-tech medical equipment based in Lafayette, the idea that everyone should be covered is good in principle.
But he opposes the health law for a variety of reasons and wants to see it struck down.
“In my opinion, the law is so screwed up that we’d be better off scrapping it and starting over,” said Jackson.
He has 16 employees and pays for health insurance for the employees and their families. It’s an expensive benefit and premiums have increased as much as 20 percent a year.
“We can’t live with that indefinitely,” Jackson said.
His biggest disappointment with the health law was that it didn’t address the critical need to bring costs down. He recently read a report that found from 2003 to 2009 alone, costs have tripled for basic health procedures like giving birth to a baby, having gall bladder surgery or getting a knee replaced.
“Our costs just keep going up and up and up,” Jackson said.
As a result of out-of-control cost increases, he’s concerned that taxes on small businesses like his will continue to rise.
He wants to ensure that people with pre-existing conditions get the health coverage they need, but he thinks it’s critical to make sure sick people don’t buy health insurance only when they need it and drop it when they don’t.
Everyone needs to become more aware of the costs of health care, Jackson said.
“We need people to have some skin in the game in order to have them be good health care shoppers.”
Jackson hopes the law will be overturned, but thinks it’s just as likely to be upheld in part or in whole.
“It really doesn’t matter what the court does. Congress is still going to have to take action to fix it.”