As rates soar, small business owners pass along more health care costs to ... - Washington Post

Health insurance costs for small business owners have been rising for more than a decade, and some are concerned the health care law will drive their premiums higher at an even faster clip.

Many appear to be coping by passing some of the costs along to their employees.

A new study shows that the number of firms offering health care plans has held fairly steady in the past few years, but as prices have continued to climb, employers, particularly those at small businesses, are asking workers to pay much more for their care.

The research was conducted by the Kaiser Family Foundation and the Health Research and Educational Trust, and for the first time since the group started taking readings in 1999, a majority of workers covered by a small employer (58 percent) now pay deductibles of more than $1,000, up from just 21 percent in 2007.

“The trend continues, especially in smaller firms,” Drew Altman, Kaiser’s chief executive, said during a press call about the study, calling the uptick “part of a quiet revolution in health insurance from more comprehensive to less comprehensive with higher deductibles.”

That revolution has left small business employees paying considerably more for their coverage than their counterparts at large companies. The average deductible for workers at small firms (those with more than two employees but less than 200) was $1,715, nearly double the $884 deductible paid by workers at large businesses.

In addition, the average annual premium paid by small business employees has steadily increased from $7,600 for family coverage in 1999 to $15,600 in 2013, according to Kaiser. Now, some say the health care law is driving those rates higher at an even faster pace.

Reliable Contracting Co., for example, which provides paving and utility services out of Gambrills, Md., has seen its premiums jump between 10 and 15 percent each of the past three years — too much for the company to bear on its own, according to the firm’s treasurer, Patricia Baldwin.

“We have absorbed some the costs and we have shared some of it with our employees,” Baldwin said, later specifying that annual deductibles for many employees have surged from about $1,200 three years ago to between $4,000 and $5000 in 2013.

Meanwhile, her company’s insurance provider, Carefirst, has told her to expect an even sharper increase this year.

In York, Pa., Fred Callahan’s small business is facing the same challenges.

He was looking at paying about 30 percent more this year to maintain the same plan his small business had in 2012. He says his insurance carrier informed him that “they’re protecting themselves by increasing rates now in anticipation of certain requirements that they’ll have to meet under Obamacare.”

In order to protect his bottom line, Callahan says he could not afford another steep jump in his rates, which had already spiked in the previous two years. His company, Colony Papers, which provides packaging products, switched to a less expensive plan earlier this year, which came with a significantly higher employee deductible.