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FeedFeeling the Pain
Small-business strategies to deal with rising health insurance costs
By Colette P. Fox
(page 1 of 3)
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In Hawaii’s small-business world, it seems nothing is certain except health care and taxes. Like death in the original proverb, the cost of health insurance isn’t something employers like to think about, but it’s always there.
Each year when health insurers raise premiums, the frustration rises to the surface. For many small bus-inesses, the 2008 rate hikes go into effect next month.
Jim Gusukuma, owner of Rainbow Drive-In, says that’s when the cost of health care will overtake the cost of rent for his prime location on Kapahulu. Gusukuma is always looking for ways to control that cost – while staying within the bounds of Hawaii’s Prepaid Health Care Act, which requires employers to provide health insurance for their employees. “Realis-tically, there’s very little a small business can do,” Gusukuma concludes.
Rick Jackson, chief operating officer of MDX Hawaii, is reaching the same threshold. “For my small business – with 40 employees – health care will become my second-largest expense after payroll,” Jackson predicts. “It will exceed my rent when the HMSA 12.8 percent rate increase goes into effect in July.”
Jackson is also president of the Hawaii Association of Health Plans, so he knows more about insurance than the average small business owner. But that doesn’t help him make tough decisions, like cutting back on family coverage. “It’s simple math for employers. As a small business we really can’t afford the family premium,” Jackson says. “I have lost employees specifically because of that.”
The latest double-digit increase comes as one more blow to businesses trying to cope with rising costs and sagging sales in trying economic times.
“I bet you won’t find anyone who has a solution for holding the cost down,” Gusukuma says. “It’s like the price of oil, it’s doomed to keep rising.”
RATE INCREASES FOR HAWAII SMALL BUSINESSES** | |||||
| HMSA | Kaiser | UHA | HMAA* | Summerlin* | |
| 2004 | 7.7% | 11.7% | 7.2% | 9.5% | Startup Year |
| 2005 | 5.0% | 11.0% | 6.4% | 6.0% | 18.9% |
| 2006 | 3.8% | 3.0% | 7.3% | 6.0% | 7.25% |
| 2007 | 6.7% | 3.75% | 8.2% | NA | NA |
| 2008 | 12.8% (proposed) | 2.0% | 12.8% | 10.0% | 10.0% |
* HMAA and Summerlin's rate increases provided by the State Insurance Division; others provided by insurers. The Insurance Commissioner did not regulate rates in 2007 due to a sunset provision in state law. | |||||
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