06/25/2008
Washington Businesses Reeling Under Skyrocketing Healthcare Costs
New survey shows workers can expect to pay more for their healthcare benefits
OLYMPIA, Wash. -- The uninsured aren't the only ones who should be concerned about the skyrocketing costs of healthcare. According to a new AARP survey, Washington employers are reeling under the pressure of rising healthcare costs. Most businesses plan on shifting more of the cost to their employees, while others have reduced or eliminated health care and other benefits.
The survey, "Condition Critical: A survey of Washington businesses about the future of employee healthcare benefits," explored the experiences and perceptions of more than 400 large, medium and small sized businesses in the state. "The findings paint a troubling picture for businesses and workers alike," said AARP State Director Doug Shadel. "Our state's employers have their backs against the wall. Most will either have to ask their employees to pay more, or be forced to drop benefits altogether."
According to the report, Washington businesses have experienced cost increases of about 32 percent over the past three years. The outlook was particularly troubling for small businesses, where costs nearly doubled, increasing by 91 percent in just three years. The majority of businesses surveyed said that if cost trends continue, most will have to shift more of the burden to their employees, including the amount they pay for premiums (Likely: 65 percent), deductibles (Likely: 65 percent) and co-pays (Likely: 66 percent).
Dean Hartman, NFIB member and owner of Capital Business Machines in Olympia, provides full health insurance benefits to his 35 employees, but it's getting tougher every year. "I've seen our premiums double and we've had to drop dental coverage," said Hartman. "We take a very active role in our employees' healthcare choices, sitting down with them every year to encourage preventative measures, but rates keep going up. At this rate, before too long we may be forced to ask employees to contribute financially to their coverage."
Faced with steadily rising costs, Washington businesses have been cutting corners wherever possible in order to maintain coverage. More than half of those surveyed (58 percent) said that the cost of employee health coverage has reduced profits, and 39 percent say they've had to pass on increased costs to consumers in the way of higher prices. More than a quarter (28 percent) have reduced other employee benefits to make room for higher healthcare costs, and 27 percent say they have reduced or eliminated pay raises and bonuses for their employees.
Steve Dilley, NFIB member and owner of Harms Pacific Transport, Inc. in Pasco, offers healthcare benefits to his 34 employees, but that could change after being hit with a 30 percent increase in his premiums this year. "I was shocked when my broker told me the bad news," said Dilley. "We want to provide these benefits to our employees because it's important and it helps us stay competitive in this job market, but this is too much. An increase like this is forcing us to consider whether or not we can continue to provide health insurance to our employees."
Unfortunately for many businesses, that time has already come. According to the Kaiser Family Foundation, over the past eight years, the number of U.S. companies offering employee health insurance has declined from 69 percent to 60 percent. Among the Washington businesses who do not currently offer coverage, one-third (34 percent) had provided benefits at some point in the past. In fact, nearly half (48 percent) offered a plan up until just three years ago. Cost was the number one factor most companies (69 percent) point to as the reason they cannot offer coverage. Fifty-three percent say revenues are too uncertain, and half (51 percent) say that their employees can't afford the cost sharing needed to provide benefits
Tom Weber, owner of Weber Construction in North Bend, has been in the road construction business for 30 years, and has always provided coverage for his employees. But with his healthcare costs now topping more than $50,000 a year for his 30 employees, he's had to make some tough decisions. "I'd love to pay my guys $10 more an hour," said Weber. "But I'm already paying so much for their health insurance that it just isn't possible." Weber says that providing coverage used to be an easy choice, but now it's a struggle. "I've always felt that providing health insurance for my employees was the right thing to do. It didn't used to be a big deal, but with costs the way they are I've had to cut back -- we used to provide dental coverage as well, but not anymore," he said.
NFIB and AARP released the survey as part of "Divided We Fail," a nationwide campaign effort by AARP, NFIB, the Service Employees International Union and the Business Roundtable. The organizations intend to raise the voices of millions of Americans who believe that healthcare and financial security are the two most pressing domestic issues facing the nation. "We're going to take these voices and opinions to Olympia, to the halls of Congress, to corporate board rooms, and to the Oval Office," said Shadel. "They need to become part of our national discussion on the future of America."
"Small business owners, their employees and dependents make up the largest segment of the uninsured population and we simply can't say that health care is our top priority and be content with the stalemate over reform," said NFIB/Washington State Director Troy Nichols.
