Benefit or Burden – Small Business – Big Health Care Bills

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Payne's Automotive Service
Payne's Automotive Service

We’ve heard how large corporations and their employees are struggling to pay health insurance bills. Often times, small companies have it worse. The lack a large workforce. They lack negotiating clout.

In part 3 of our series – Benefit or Burden – The Rising Cost of Health Insurance, we tell the small business story.

The music of Led Zeppelin on the radio fills the two bays at Payne’s Service on Indianola Avenue. The automotive shop is a throwback to the 1950s – a once typical small town service station. Payne’s employs only seven people.

Mechanic Ken Hall loosens the lug nuts on a van’s wheel. Hall has worked at Payne’s for 14 years and is on the company’s insurance plan.

Thank God I’m healthy so I really don’t have to use it, Hall said.

The auto shop’s health insurance plan costs $700 a month for a single person and a thousand for a family. Under Payne’s health plan employees pay 10%, the shop owners pay 90%. So for Ken Hall, 53 and single, he pays $70 a month.

Payne’s health plan includes a deductible. Employees must meet a $1,200 threshold before insurance starts covering expenses. Like the shop itself, Payne’s health insurance plan has no frills – but the policy is still expensive. Payne’s head tech, Jeff Roth.

It adds up for a small business. I mean, there’s a lot of money that goes out. How much do you think you’re forking out a month to cover your employees? Right now we’re almost into $4,000 a month, said Roth.

Roth says they’ve had a hard time finding a company to insure them. Many companies use a health maintenance organization or a preferred provider organization to insure their workers. HMOs and PPOs are one way to help lower health care costs for workers and their employers. But Roth says Payne’s small workforce deters many health insurance companies, especially HMO’s and PPO’s from offering coverage.

Right now with as little people as we have it’s very hard to find, Roth said.

The majority of companies the size of Payne’s don’t offer any health insurance. A Kaiser Family Foundation survey found only 48% of the smallest companies, those with three to nine workers, offer health insurance to employees.

But as the size of the staff increases so does the likelihood small businesses offer health coverage. 8 out of ten companies with at least 25 workers has an employee health plan. High cost is main reason small businesses don’t offer health insurance. And its expensive because there are fewer workers over which to spread the health risk.

Ken Hall says he does not like to complain about the cost of his insurance. He thinks about people who have none. But he has noticed the changes in cost over the last 15 years or so.

The price for what we have to pay, even though the company picks up two-thirds of it, it just, you know, keeps going up and up and up and up, said Hall.

Roth says meeting the premiums each month can be tough if business slows down. But he says Payne’s is fortunate to have a steady clientele. Roth says other small businesses aren’t as lucky.

Business as it gets slow, I mean, it can almost break you and put you under, said Roth.

While Payne’s Service is considered the smallest of small businesses, there are other companies with fewer workers.

52-year-old Ron Frank works out of his Galloway home. He’s been self employed for 27 years. He’s an advertising consultant. Before that Ron sold industrial chemicals. He says he’s always had to pay his family’s health insurance. He’s paid it for about three decades.

With his children grown one might think the Frank’s premiums would go down since it’s just he and his wife, Darlene. But that’s not the case.

Our insurance keeps going up and up and up, Frank said.

Ron says they shop around. But that gets hard because he has a few health problems including a bad back on which he’s had two surgeries.

Occasionally I get a phone call from somebody saying that they’ve got health insurance that they’d like to offer me. And all I have to do is just say well, I have a couple of ailments that you won’t cover and bingo and they say thanks and that’s the end of it, Frank said.

Until a few months ago, Ron says it cost more than a thousand dollars a month to insure the two of them. But they’ve made a few changes that seem to help a little.

What we’ve had to do is get two separate policies, one for her because she’s healthier than I am and one for myself. That seems to help, plus we’ve raised our deductibles pretty high.

Darlene, who is the couple’s bookkeeper, only has major medical. That means she’s only covered in the event of a catastrophic illness or injury. And they both have to reach a 25-hundred dollar deductible before the insurance kicks in. Doctor visits and prescriptions are paid out of pocket until they meet the deductible.

To bring in extra money Ron works a part-time job. He dons a tuxedo, grabs his top hat and morphs into The Amazing Mr. Magic.” But you can just call him “Amazing.

Amazing…. began performing magic tricks when he was 12 and he’s kept it up for the past 40 years.

I’m a semi-professional in that, so I do that whenever a gig pops up type of thing.

Ron’s still working on the trick where he pulls money from his top hat. Until then, the Franks stay on a budget so they can make their monthly premiums. Darlene says there could be a point when they’ll have to be more selective with their healthcare.

Do you have every test you can have? Is there a time when you say that’s something I’ll just have to bypass. I don’t know.

Darlene says if worse came to worse one of them – likely her – might even drop her health insurance completely.

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