Friday, March 19, 2010

Fewer businesses offering health insurance

Cuts mainly apply to businesses with 10 or fewer workers

Express Staff Writer

Graphic courtesy of Idaho Department of Labor Percent of Idaho employers offering medical benefits to full-time employees, by employer size.

The cost of health insurance for Greg Peterson's employees tripled in less than a decade, from an average monthly cost of $150 per employee to more than $450.

In an effort to freeze the cost, Peterson and the business's other co-owners have re-proportioned premium costs, making employees pay 30 percent of the premium instead of the previous 20 percent. The deductible has also been raised from $250 to $2,000.

"What I told you about our business is representative of many businesses in town," said Peterson, accountant and managing partner of Ketchum company Lallman, Felton, Peterson & Pierce, PA.

Peterson has been doing the taxes of valley businesses for 20 years, seeing firsthand insurance costs and plans. He said other businesses are seeing the same insurance-price increases, and the first response is often to reduce employee coverage and increase deductibles.

"We used to pay for the entire family," Peterson said, "then we switched to only covering the employee."

Brett Peterson, owner of Hailey Auto Body, said it's not a question of cheap employers hoarding the difference. He said the costs simply can't be absorbed, a problem exacerbated by the recession.

"When you have to choose between health insurance and eating, I don't care who you are, you're going to pick eating," Brett Peterson said.

Businesses are pinching pennies. The first nonessential expense to be trimmed is often health care.

"It doesn't matter if you like your employees or not," Brett Peterson said. "The money's not there."

He said the auto body shop has about three to four full-time employees, depending on the time of year, and no health insurance.

Greg Peterson said many businesses have already taken the first step of cutting benefits, but still found increasing premiums too much to bear. Only one other step can be made.

And that step has been taken by many businesses throughout the state, according to a survey conducted by the Idaho Department of Labor questioning 800 Idaho businesses about health-care coverage. Results reveal that medical coverage for full-time workers has been steadily sliding since the 2001 recession.

The survey reports that only a little more than half of Idaho employers offered medical coverage to their full-time employees in 2009. In 2002, that number stood at 82 percent. By 2005, the percentage had fallen to 74 percent, and in 2007 it was down to 63 percent.

Jennifer Quintero, research analyst for the Idaho Department of Labor, said a decrease in health-care coverage was expected in 2009, for "obvious reasons."

That's the economy.

"If it comes down to cutting benefits or employees, you cut benefits," Quintero said. "But there was a positive kind of surprise."

She said this consistent drop in employer-sponsored benefits applies almost entirely to Idaho's smallest businesses—10 employees or fewer. Businesses of 50 employers or fewer make up half of Idaho's labor force.

The survey found that the percentage of businesses with more than 10 employees offering health insurance was essentially unchanged from 2007 to 2009.

Atkinsons' Market fits inside this category, employing about 280 workers. Co-owner Chip Atkinson said the business covers 90 percent of full-time employees' premiums.

"We haven't cut anything," he said, "and we don't plan to."

But, Greg Peterson said, Atkinsons' is an usually large company for the Wood River Valley. Still, Atkinson said, premiums have increased for the valley grocery chain, and are a "significant" expense.

Despite increasing premiums in Idaho, the state has the lowest premiums of any state.

A study released in August by The Commonwealth Fund found that Idaho had the lowest annual premiums in 2008 at an average of $10,800 for family coverage. Massachussetts' premiums were the highest at $13,500 and the national average was $12,298. From 1999 to 2008, premiums for employer-sponsored family health insurance increased by 119 percent nationally.

The Commonwealth Fund is a private foundation supporting independent research of health-care issues.

Despite Idaho's having the cheapest coverage, the state still saw a 23 percent increase for single coverage and 27 percent increase for family coverage between 2003 and 2008. The national average increase during that time was 26 percent single and 33 percent family.

Stewart Johnson, spokesman for Blue Cross of Idaho, said premiums are based on health care costs.

"As costs go up, so do premiums," he said, mentioning that the state's largest health insurer is a nonprofit. "The money we bring in from premiums goes out to pay claims."

But that doesn't help Greg Peterson pay the bills. Peterson acknowledged that costs naturally swell over time for everything, but questioned the rate of health care increases. He said his firm's premium has increased by as much as 25 percent in one year—far more than the rate of inflation.

Trevon Milliard:

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