INSIGHT ON: Health Insurance – Watchful waiting

Posted on Apr 2, 2013 :: Health Insurance , Insight On
Posted by , Insight on Business Staff Writer

Employers wary about impact the Affordable Care Act will have come Oct. 1

Small and mid-size business owners still have few details when it comes to how the Patient Protection and Affordable Care Act, widely known as Obamacare, will affect their company health insurance plans. For now, many say they plan to continue with their existing health coverage and hope for the best.

Starting Oct 1, if the oft-moved deadline holds, companies with 50 or more employees working full time (defined as 30 hours or more per week) must provide health insurance or pay a $2,000 per person fine.

“It’s not changing how we do business,” says Eric Blankenheim, managing member of Blankenheim Services, an ergonomics consultancy. “We provide pretty good insurance to our people anyway. We are at about 45 employees, but I wouldn’t base a hiring decision on staying under 50.”

Dean Re, owner of MECA & Technology Machine in Green Bay, says his company currently employs fewer than 50, but he won’t let the threshold discourage him if he needs to make additional hires to support his business making parts for Flexographic printing presses.

“If we have opportunities for growth, I am not going to let the 50-employee rule influence me,” Re says.

Cap Wulf, president of Wulf Brothers Heating and Cooling in Sturgeon Bay, fears Obamacare will raise the private companies’ health insurance costs to the level that unionized public employees get.

“A public employee’s health insurance is approaching $20,000 a year while my employee costs are around $9,000,” he says. Those costs include broad coverage options including vision and dental.

“Our insurance will go up because the government keeps adding more requirements,” Wulf says. “The government will blame the insurance companies, but if the (insurance companies) have to cover people with pre-existing conditions, their costs are going to go way up.”

While Obamacare has not fully affected people yet, Wulf is concerned that the secretary of Health and Human Services has yet to determine and define many details of the law.

If companies are going to keep their health care plans affordable, they will need to take a more aggressive approach to controlling costs, says John Torinus, chairman of Serigraph in West Bend, and author of the book “The Company That Solved Health Care: How Serigraph Dramatically Reduced Skyrocketing Costs While Providing Better Care and How Every Company Can Do the Same.”

Torinus has a second book scheduled for publication in June.

With more than 1,000 employees, Serigraph is far beyond the breakpoint for providing health insurance, and Torinus says he can’t afford not to provide it.

“We have a lot of talented people here and I can’t lose them. If I were to drop health care, my best people would go looking,” he says. His company is self-insured for health care with a catastrophic insurance policy for cases that go over $200,000.

Businesses have three choices, Torinus says. They can drop health coverage and pay the penalty, stay with coverage and manage it, or go to a defined contribution plan where they give employees a fixed contribution, $5,000 as an example, to buy their own coverage on the public exchange where they might pick up a federal subsidy, maybe $3,000 or $4,000.

“The average family spends $16,500 on health care in the U.S., so $8,000 or $9,000 is not going to be enough to buy a decent policy,” he says.

Serigraph has succeeded with its plan of using aggressive management of costs, including negotiating favorable prices with local providers, says Torinus. Serigraph spends about $9,000 per employee, he says. Nationally, best practice costs are $8,000 to $8,500 per employee, per year.

Torinus is critical of Obamacare for not addressing health care costs.

“Smart employers are doing intelligent, innovative management of health care, and they will be able to continue to offer it at a reasonable price,” he says. “If the public did the same thing, you could have universal coverage; if they just managed the damned costs we could afford it.”

Torinus expects small companies will continue to drop health insurance as a benefit for their staff. Currently, about 60 percent of the country’s 3 million businesses provide health care; it used to be 70 percent, he says, and it has been dropping about one percentage point a year.

“By the time all these businesses make a decision on staying in health care, we will be down to 50 percent,” Torinus says.