By SPIROS GALLOS
Capital News Service
LANSING — The rising cost of providing health care for employees may force some small businesses to close.
The Small Business Association of Michigan (SBAM) is lobbying for the state Legislature to do something to drive down the rising costs of health care.
Most small business owners don’t know how to cope with the increasing costs, said Wannis Parris, president of Delta Machining Inc. in Niles. “It’s a definite problem and no one I know has an answer to it,” he said.
Over the past four years, health insurance premiums have doubled, and they are expected to rise by 20 to 25 percent this year, according to SBAM president and CEO Gary M. Woodbury.
Parris has felt the sting of increasing insurance costs since 1999. Three years ago, the cost for Delta’s 130 to 140 employees was $480,000. Today, those same employees cost the company $700,000 in insurance coverage.
Because of the rising costs, businesses are asking employees to help reduce costs by paying higher deductibles, increasing the amount of co-pays, and in some cases, reducing coverage, said Barry Cargill, SBAM vice president of government relations.
Rep. Ron Jelinek, R-Three Oaks, wants to see reform to lower costs to employees. “I’d like to pass some bills to lessen doctors’ liability for malpractice because the cost for malpractice insurance is so high that doctors have to pass it on to the patients,” he said.
Michigan has two sets of rules for commercial health care providers. One set for Blue Cross Blue Shield of Michigan and one set for all other providers.
Blue Cross Blue Shield of Michigan (BCBSM) is the state’s largest insurance provider. “One set of rules, Public Act 350, requires the Blues to accept all risk and develop a Ôcommunity rate,’ regardless of health status, age or gender,” Woodbury said.
All other providers operate in Michigan without restrictions on underwriting characteristics, according to Woodbury. This allows providers to assign lower rates to healthy groups, while assigning groups with unhealthy employees a higher price, he said.
This forces the Blues to insure more unhealthy people, driving costs up for the whole community, Woodbury said.
The solution to the problem of health insurance access and affordability, according to SBAM, is for Michigan to require rate bands for all insurers. Thirty-seven other states currently require rate bands.
“Rate bands say to an insurer that if you are doing business in small groups in this state, then all of your rates must fall within a band from your highest risk rate to your lowest risk rate,” said Woodbury.
© 2002, Capital News Service, Michigan State University School of Journalism
By SPIROS GALLOS