Budget Buster Rising Health Insurance Costs Putting Squeeze on Small Businesses

Article excerpt

Byline: S. A. Mawhorr Daily Herald Business Writer

Mike Deuerling stopped providing health insurance last year for his employees at the small marketing firm he founded when the premiums became too expensive.

"I took the money and gave it to them so they could look into their own health insurance," he said.

And then Deuerling's wife got a job that provided benefits so the two of them could have health insurance.

Still, Deuerling, owner of Advanced Marketing Communications, considers himself lucky because his employees at the Naperville company - there were four at the time - were able to afford insurance on their own because they were young, healthy and the majority were single.

The cost of health insurance just goes up every year putting the squeeze on small businesses already facing higher costs than larger companies that can command breaks on premiums because the risk is divided over a larger pool of employees.

Small businesses in Lake County have reported increases this year as high as 37 percent. On average, insurance premiums increased 13.9 percent this year, the biggest hike since 1990 and the third consecutive year for double-digit increase, according to a survey by the Kaiser Family Foundation.

As the cost of insurance goes up and the economy struggles, the ranks of the uninsured swelled to 43.6 million last year, according to the U.S. Census Bureau. That's a 6 percent jump from 2001. The percentage of Americans without health coverage rose from 14.6 to 15.2.

And for the second year in a row, the overall decrease in coverage was attributed to a drop in the percentage, from 62.6 percent to 61.3 percent, of people covered by employment-based health insurance, according to the Census Bureau.

At Naperville-based Human Resource Management Systems, consultants help employers figure out how to keep a hold of insurance benefits for their employees without compromising their balance sheets.

One tactic is to explain to employees how they can save money by choices, such as requesting generic drugs over brand name medicine when possible, said Human Resource Management Systems Vice President Mariane White.

Employers can influence those choices by giving each employee a pool of money to spend on health care each year. When the money runs out, employees pay out of their own pocket.

Employers also can offer a variety of plans to employees, some people will choose more expensive plans that allow for more choices among hospitals and doctors while many will be satisfied with a more limited and less expensive plan, White said. …