Natasha Menezes

A revealing article by Kathleen Koster posted on the EBN Benefits News website earlier this month discusses the issue of small businesses suffering as a result of the increasing costs of health insurance, as stated at the Senate committee hearing.

As conferred by results presented by Sen. Tome Harkin, chairman of the Health, Education, Labor and Pensions Committee, in the past ten years, the cost of health insurance for small businesses has inflated by an astonishing 123%.

Sen. Harkin also discussed the results of a survey performed last August which illustrated that “15% of small businesses were offered premium increases of over 20% for renewing the same plan they had last year.” He went on to state that “on average, premium cost increases of 15% are expected for the coming year.”

Koster disclosed that the hearings drawn more attention to and put more focus on the issues surrounding small businesses suffering against rising health insurance costs. Koster also suggests that the hearings throw some light on the effect of the economic world not satisfying the demand for relief through health restructuring.

According to Harkin, “America’s small businesses are woven into the fabric of the American dream. They reflect our pioneering and entrepreneurial spirit and are the engine of economic growth in our country.”

Harkin went on to declare that small businesses run the jeopardy of having their entire workforce change due to one simply alteration; such as losing an employee, finding out that an employee or spouse is ill, employing an older employee, or even something like employing a woman. According to Harkin, these changes and factors can increase premiums by 150% to 200% and more. Koster mentioned here that these statistics and findings were backed up with real-life cases from employers who had also testified at the hearing.

An Editor with The Storm Lake Times, Art Cullen, illustrated that his company went through a 270% rate increase overall from 1992 to 2009, despite the fact that the cost of living inflation in the upper Midwest is 65%. Koster explained that each year, Art Cullen has seen “double-digit increases of insurance rates, with an 11% upswing last year.” Koster stressed that this year, they expect the upswing to be in the 22% range.

Cullen confirmed the struggles faced by his company when he stated “our rates doubled when one employee, previously bankrupted by medical bills, had a kidney transplant in 2005. Rates have gone up by double digits every year since. We cannot switch insurers because of employees with pre-existing conditions (like cancer, diabetes, and back surgery). And even if we could get around the pre-existing conditions, one health insurance company controls about 85% of the local market.” Cullen also went on to announce that his company was in desperate need of a public option in order to protect it and help it grow.

He went on to emphasize that people “need to know what a single health catastrophe will not bankrupt them and bring down everything they have worked for over the past 20 years. We want to invest in out business, and thus in our community with a thriving local newspaper that brings a community together. Rising health care expenses represent a significant bar to that dream.”

As stated by Koster, Sen. Harkin underlined that small businesses presently pay 18% more than large businesses for using precisely the same insurance plans, coverage and policy.

Harkin suggests that to change this, exchanges would help small businesses with the act of grouping them together so that their population is greater and more varied. According to Harkin, this would help them to negotiate better rates.

Harkin ended by saying “we’re fighting for you and help is on the way.” Koster concluded that Harkin is presently attempting to focus on the urgency to address solutions for suffering small businesses, with the health care reform debate “continuing to rage on Capitol Hill.”