Small Business Faces Sharp Rise in Costs of Health Care By REED ABELSON
As Congress nears votes on legislation that would overhaul the health care system, many small businesses say they are facing the steepest rise in insurance premiums they have seen in recent years.
Insurance brokers and benefits consultants say their small business clients are seeing premiums go up an average of about 15 percent for the coming year — double the rate of last year’s increases. That would mean an annual premium that was $4,500 per employee in 2008 and $4,800 this year would rise to $5,500 in 2010.
The higher premiums at least partly reflect the inexorable rise of medical costs, which is forcing Medicare to raise premiums, too. Health insurance bills are also rising for big employers, but because they have more negotiating clout, their increases are generally not as steep....
The House speaker, Nancy Pelosi of California, said the sharp rise in premiums for small businesses offered the latest evidence that Congress must act swiftly on health care legislation.
“This underlines the urgent need for health insurance reform, including a public option,†she said in an interview. “We need to have competition for the insurance companies to keep premiums down.â€
Like the insurers, Republican lawmakers, who portray themselves as champions of small business, argue that the proposed legislation would raise premiums across the board because sick people would be more likely to enroll than healthy people...
...Edward Kaplan, a consultant with the Segal Company, said his clients were seeing renewals for coverage at prices 15 to 23 percent higher this year. Last year, he said, they typically faced increases of 7 to 12 percent.
The brokers and consultants say the price jumps seem hard to justify. “Frankly, I’m mystified by the size of the increases,†said one broker, Charles J. Newman, who works with small employers in the New York area.
Some say the threat of an overhaul may be at least part of the reason. Joshua Miley, a consultant with HighRoads, which analyzes benefit information for employers, said the “undercurrent of health reform is driving part of the renewal increases.â€
HighRoads projects that premiums will rise 14.4 percent for an individual in a health maintenance organization plan at a typical small employer.
There is no question that insurers are under pressure from Wall Street. In recent years, insurers were often not quick enough to raise their premiums well above the rising cost of medical care.
But they have heard from angry investors disappointed by the companies’ earnings.
“There’s no one out there who hasn’t had to do a mea culpa to Wall Street,†said Sheryl Skolnick, an analyst for Pali Capital who follows the companies. While the industry is particularly vulnerable now in Washington, she said, “it seems like they’re more afraid of Wall Street.â€
Michael A. Turpin, a former senior executive for UnitedHealth, the insurer, and now a top official at USI Holdings, an insurance brokerage firm, said insurers were now “under so much pressure to post earnings, they’re going to make hay while the sun is shining.â€
...Small businesses, besides having less negotiating leverage than big employers, tend to pay more for the same coverage because they cannot spread the cost of expensive medical conditions or hospitalizations over large numbers of workers. Premiums can be especially high if they have sick or older workers.
Owners of small companies say the lack of options is why they have been paying increasingly higher premiums for less and less coverage — this year perhaps more than ever.
In August, when Walter Rowen, who owns Susquehanna Glass in Columbia, Pa., sought to renew his company’s coverage for two dozen employees, he said his insurer demanded a 160 percent rate increase. Mr. Rowen said he was told his work force was “getting too old and very expensive.â€
Mr. Rowen said his insurance broker found that any other health plan was likely to charge 30 to 50 percent more than he paid last year. He chose a less generous plan from a different carrier for 44 percent morehttp://www.nytimes.com/2009/10/25/busin ... ealth.html 
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