As Congress nears votes on legislation that would overhaul the health care system, many small businesses say they are facing the steepest rise in insurance premiums they have seen in recent years.
Lets truly get to the bottom of the higher premiums debate. This is a setup that will crush small businesses and owners. At a time when we need to be lightening the heavy load that is currently being carried by small business, it appears we are making that load even heavier to bare.
Insurance brokers and benefits consultants say their small business clients are seeing premiums go up an average of about 15 percent for the coming year — double the rate of last year’s increases. That would mean an annual premium that was $4,500 per employee in 2008 and $4,800 this year would rise to $5,500 in 2010.
The higher premiums at least partly reflect the inexorable rise of medical costs, which is forcing Medicare to raise premiums, too. Health insurance bills are also rising for big employers, but because they have more negotiating clout, their increases are generally not as steep.
Higher medical costs aside, some experts say they think the insurance industry, under pressure from Wall Street, is raising premiums to get ahead of any legislative changes that might reduce their profits.
The increases come at a politically fraught time for the insurers, as they try to fight off the creation of a government-run competitor and as they push their case that they have a central role to play in controlling the nation’s health care costs.
What does that mean actually? It means, the insurance industry has been given a sneak-peak look at the forthcoming quiz;they got all the answers now. With this additional information they have decided to increased their premiums based on advice from the same Wall Street who we bailed out 11 months ago. What they understand is that Congress will pass legislation, Obama will sign it, forcing the insurance industry to lower premiums by 30% over the next 5-10 years starting in 18-24 months.
They will pad their pockets and then be forced to lower the premiums to the same pre-premium increase amounts thereby not actually reducing premiums for small businesses and entrepreneurs at all. Congress looks good, Obama passes out pens at The White House for signing sweeping legislation that will in essence change nothing. Small business takes another one on the chin.
President Obama, in his Saturday radio address, said the Democrats’ health insurance overhaul would help small businesses and stimulate the economy by providing relief from “the crushing costs of health care — costs that have forced too many small businesses to cut benefits, shed jobs, or shut their doors for good.”
The insurance industry has already been under sharp attack by Democratic lawmakers who favor creating a government-run insurance plan that would compete with private insurers. Without that competition, proponents say, insurers will continue to price coverage beyond the reach of many Americans.
Insurers say there is no need for a government-run insurance plan and argue that their health plans are already responsible for many of the initiatives, like programs to coordinate care for chronic conditions, that ultimately lower costs.
Insurers’ “profits are not responsible for increased health care costs,” said Robert Zirkelbach, a spokesman for the industry’s trade group, America’s Health Insurance Plans.
Like the insurers, Republican lawmakers, who portray themselves as champions of small business, argue that the proposed legislation would raise premiums across the board because sick people would be more likely to enroll than healthy people.
They also say the taxes and other ways of paying for the program would be passed on to employers in higher premiums, only making matters worse for small businesses.
The Senate minority leader, Mitch McConnell of Kentucky, said in a response to the president’s radio address, “We can’t support a bill that will raise premiums.” The big insurance companies declined to comment.
With negotiations over next year’s premiums still under way, data on rate increases are mostly anecdotal. Formal surveys have not yet been completed by the health benefits consultants who track the figures. And in some parts of the country, experts say rates are not overly high.
But benefits consultants say there is no doubt that premiums are soaring for many small businesses. Edward Kaplan, a consultant with the Segal Company, said his clients were seeing renewals for coverage at prices 15 to 23 percent higher this year. Last year, he said, they typically faced increases of 7 to 12 percent.
The brokers and consultants say the price jumps seem hard to justify. “Frankly, I’m mystified by the size of the increases,” said one broker, Charles J. Newman, who works with small employers in the New York area.
There is no question that insurers are under pressure from Wall Street. In recent years, insurers were often not quick enough to raise their premiums well above the rising cost of medical care.
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