September 28, 2005
by Dylan Skriloff
Marty Hettinger, CFO of Star-Kay-White, a company with 75 employees that specializes in the production of food flavors, especially for ice cream, said health care costs have been spiraling upward for his company for a number of years.
"It’s kind of gotten our attention. Five years of double digit increases, yes we’ve seen that and we’ve felt that. This year we really didn’t jiggle the benefits any but the employee’s portion was made bigger," he said.
Like most businesses Hettinger has had to switch his insurance carrier a number of times.
"A couple years ago we were with AETNA then we switched over to UNITED and I guess it was early this year UNITED bought OXFORD and seemingly they did that acquisition and then saw the opportunity to jack the price up. When we saw the renewal numbers with OXFORD we ended up going back to AETNA. It looked like the best deal. Even with moving the increase was still large," Hettinger said.
Hettinger’s experience has been that every few years one of the major carriers increases their rates to the point that businesses have to leave the carrier. He felt cheated by the process.
"You see on the business news reports of a 20% increase in profit for this or that health care company and then they increase your rates another 10%," he said.
"Switching can be a problem. My dermatologist is not included with the new carrier," he said.
In all, the costs of health insurance are fairly daunting, Hettinger says.
"If you hire a new employee, family insurance can cost 15,000 dollars a year. You figure $35,000 dollars in salary, it’s almost 50% in benefits, plus taxes and social security co-pay. Couple that with what’s going on with oil and gas prices and it’s a problem," he said.
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Lou Silver is the owner of Silver Roofing in Garnerville. He has about 15 employees, most of whom are insured. Though he feels the annual pinch of health care premium increases, he has far more costly rate issues to contend with from his liability insurance which has skyrocketed by over $100,000 in the last two years, despite no employee losses.
"Health-care rates have been increasing but it pales in comparison to the increase in our liability insurance which has gone up over 300% in the last 2 years. Health care is very digestible in comparison," Silver said.
"If you want to have good employees you have to extend [coverage] to good people. Costs are always going up but it’s the cost of doing business. Sometimes we change the plan and increase the co-pay, but changing HMO’s is not something that would sit well with employees. It’s worth it to keep those key people. It’s certainly a concern, but it’s worth it," he said.
Ira Wickes, owner of Ira Wickes Arborists has 25 employees, most whom buy into the company’s health plan. "It hurts," he said of the annual hikes. "We have not switched carriers, but have passed costs along to the employees."
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