Small Biz Eyes ‘Obamacare’ Options as Costs Mount

Health insurance premiums have climbed 40 percent over the last four years for Cranston’s Stylecraft Inc., a small manufacturer of corporate recognition jewelry like rings and lapel pins. Employees’ deductibles have increased from $500 to $2,000, and co-payments have gone from $5 to $30.

A few of its 32 employees can’t afford coverage even with Stylecraft contributing 55 percent, according to human resources director Deb Cavanaugh. Some spend as much as a third of their income on health costs. “It’s ridiculous. It’s painful,” she said.

It’s small businesses like Stylecraft that are being courted to use the state-run health benefits exchange, which is rolling out in October as a centerpiece of the federal health care overhaul. Most Americans will be required to have coverage as of Jan. 1, or pay a fine. Individuals and small businesses will be able to shop for insurance through HealthSource RI, with many qualifying for subsidies or tax credits, and the exchange’s success will rely in large part on how many use it.

Cavanaugh concedes she doesn’t know much about the exchange, but is skeptical it can stem increased costs.

“There’s no way to control the costs. There’s not enough competition and there aren’t enough plans,” she said. “I don’t see costs going down any time soon.”

HealthSource RI Director Christine Ferguson says the exchange is working to change that. She expects there will be 28 plans on the exchange in 2014, including 16 for small businesses. Neighborhood Health Plan of Rhode Island is joining the small group — and individual — market for the first time. Ferguson hopes employers will take advantage of the ability, through the exchange, to pick a benefit level, then let employees choose a plan that works for them.

“The issue is really the availability of health insurance and the affordability of it,” she said recently.

Between 70,000 and 100,000 people in Rhode Island are expected to get insurance through the exchange in the first 18 months, many through their employers. The state has about 30,000 small businesses, half of which offer insurance.

“We’re going to be going to those people and convincing them to come to us,” said exchange spokesman Ian Lang.

At Stylecraft, the company was paying 60 percent of its employees’ coverage a few years ago, but costs kept climbing, Cavanaugh said. The company absorbed the increases for a while, but then decided it had to ask employees to pay a larger share, even though wages were static and the work week had been pared to 36 hours. Individual plans now cost $52 a week; family plans are $145.

Stylecraft has switched among health insurance carriers to get the most “bang for the buck,” Cavanaugh said. A change last year brought co-payments for regular doctor’s visits back down to $15. But many more services, including some lab work, are now applied to the deductible; some employees forgo care because they don’t want to pay.

“I need to have healthy employees to have good employees. If they can’t afford to be healthy, it’s a detriment to my business,” she said. “Am I looking forward to the exchange? I don’t know.”

This article appeared in print in the July 31st, 2013 edition of Hamodia.