Small Businesses Struggle to Offer Healthcare

As the Congressional debate over healthcare reform persists, small business owners are left to fend for themselves and hope for curing relief.

Charles Ewing Sr., owner of Ewing Moving Service Inc. & Storage in Memphis, Tennessee is among those left to bear the burden of high premium and coverage costs.  The small business owner, whose company saw revenues of $3 million this past year, has eliminated healthcare insurance for all but five of his 47 full-time employees.

“We’re planning to offer our employees the amount of cash that we would pay for healthcare to them as a bonus,” says Ewing, 50, who started the company in 1980. “They can purchase their own healthcare and get it cheaper.”

BlueCross/BlueShield is Ewing Moving Service’s insurance provider and the cost is split 50/50 between the company and staff for single coverage.  Ewing says he came to his decision as premium costs rose 15% to 20% annually. While insured employees were paying half of the $224 per month, Ewing’s bill to insure his employees peaked at $3,600 monthly.  He says he even shopped around to another insurance provider, Humana, but to no avail because although Humana’s rates were cheaper, since some employees have preexisting health conditions, Ewing would be charged more.

Ewing says because of the rise in healthcare costs, it is difficult for him to recruit new employees because the benefits package is not attractive enough to compete. And he is not alone in his efforts.

According to Aflac Inc., the largest provider of supplemental insurance in the United States, small business owners are taking drastic measures to remedy their company’s insurance dilemma.  Their study, “Small Business: Now More Than Ever,” led by Accelerant Research interviewed small businesses with five to 99 employees, not home-based and with annual revenues of at least $100,000.

Among its findings released earlier this year, 62% of those surveyed find it more difficult to offer employees a strong benefits package today compared with a year ago; 52% now offer less medical insurance coverage, and nearly 60% are aggressively seeking ways to reduce insurance costs. Of course, this does not negate findings that small business owners still worry about the costs of benefits for employees (59%).

“This is the

same story we hear from businesses all across the country,” says ReShonda Young, operations manager for Alpha Express Inc., a family-owned, 34-employee courier service based in Waterloo, Iowa, and member of the National Advisory Council of the Main Street Alliance, a national network of small business coalitions in 15 states working with small business owners to advocate for healthcare. “Many small businesses are cutting back on coverage, going to policies with higher deductibles or passing more of the costs onto their employees.”

President Barack Obama is adamant about seeing the healthcare reform bill pass by the end of the year. In his administration’s 2010 fiscal budget, Obama plans to reserve $630 billion over the next 10 years towards financing reforms for the healthcare

system. This money will allow people to have a choice between health plans and physicians, which they anticipate would lead to more affordable healthcare. The reform will be financed through seven initiatives, such as reducing Medicare overpayments to private insurers through competitive payments.

Young, 34, is on par with the Main Street Alliance’s position that calls on the government to take responsibility.

“In many states, there is no competition in the private insurance market,” she says, adding that small businesses need “real choices” between private and public health insurance plans. “A public option, similar to the plan offered to government employees, is the best option in my opinion. If not, there needs to be government regulation and transparency within the heath insurance industry.”