Small businesses push back against mounting health care costs
From their office on Pontiac Avenue, the 34 employees of Stylecraft Incorporated huddle over machinery, carefully handling products one at a time. Walk room to room and watch as individuals cast molds, weld pins and buff and shine the final products – from lapel pins and medals to corporate recognition rings.
It’s delicate work, and some employees have been with Stylecraft for most of the company’s 45-year history.
But for many of those 34 employees, they have watched helplessly as their paychecks are cut by the crippling costs of health insurance for small businesses.
“We’re overwhelmed,” said Deb Cavanaugh, director of human resources for Stylecraft. “We’re just frustrated and it feels a little hopeless as far as where our health care is going in the future.”
Over the past four years, Stylecraft’s health premiums have increased by 40 percent, with the average health insurance premiums swelling from $8,676 to $12,132 per person since 2008. Personal deductibles have increased from $500 to $2,000, and co-pays for general doctors’ visits that were once just $5 are as high as $60.
Cavanaugh said some of her employees spend as much as 25 to 30 percent of their gross income on health care. The company, overall, pays roughly $200,000 each year.
“This is all happening at the same time that our employees are not getting raises, their utilities are going up and their mortgages are going up. The money has to either come from them or from us,” Cavanaugh said.
The numbers are significant, but Stylecraft is not alone. Stephen Boyle, president of the Cranston Chamber of Commerce, says he is hearing from countless members that health care costs are strangling them and hurting their profits, and in some cases, their long-term viability.
“They’re afraid they’re going to lose their workforce,” he said.
Cavanaugh believes that if unemployment were not so high, Stylecraft and many businesses would see employees leaving due to high personal costs incurred through health care.
“If it were a competitive market, this could be the key factor in where people go to get jobs,” she said.
At the same time, Stylecraft is facing decreasing profits, as the small business struggles to keep up with industry giants like Jostens.
“The corporate recognition is kind of the first thing to go when you’re cutting the budget,” Cavanaugh said.
The problem feels insurmountable, especially for small businesses like Stylecraft that are already struggling financially.
“It’s incredible and we don’t know where to address it,” Cavanaugh said.
She worries about the future of health care, and how companies can continue to offer benefits to hardworking employees.
“What it means to me is that health insurance becomes a luxury. At the rate it’s going now, it’s going to become a situation where less people are going to be insured and it’s going to be more of a burden on the health care system,” she said.
That is a decision she hopes never to make.
“Small businesses see their employees as family, so it’s very difficult to make a decision like that,” she said.
Cavanaugh added that if employees opt out of health insurance, or companies no longer add it, there is only one direct pay option in Rhode Island: Blue Cross. That removes any competition that could control costs, and individuals no longer have a choice of their provider.
“You can’t have a healthy workforce if they can’t afford to be healthy,” Cavanaugh said.
Boyle agrees that there is no easy solution, but said the Chamber hopes to lead Stylecraft and other Cranston businesses in the fight to get a handle on health care costs.
The Cranston Chamber is now a member of the Health Insurance Small Employer Taskforce, a coalition that is engaging small businesses and non-profits to lobby health insurance stakeholders, with the help of Rhode Island Health Insurance Commissioner Christopher Koller.
Together with Koller, the Taskforce has offered five sessions to date for members that address the health insurance obstacles they face. These sessions have discussed factors that drive up costs and put small businesses face to face with health insurance company CEOs and providers.
“There’s a lot of moving parts going on and we’re not totally blaming the rates on them,” Boyle said.
He hopes that opening the dialogue between health insurance providers and employers can help promote along plan design changes that would reduce costs. Taskforce members packed the room during rate hearings, which Boyle believes contributed to the reduced rate increase from 4.5 percent down to 1.65 percent.
“We mobilized and got the lowest rate increase in five years,” he said. “The businesses need to join the Taskforce – they need to show up at these hearings. It puts pressure on the carriers and on the providers to go back and look at their plans.”
That baseline rate is affected by other factors, though, including the age of a company’s workforce. Stylecraft has a relatively old workforce, meaning their health care costs are higher.
Boyle said that, “1.65 percent will probably translate to 4 or 5 percent on a good day.”
Still, Boyle believes that putting pressure on carriers and providers is a good start for driving down costs. To do that effectively, he says more businesses and employers need to get on board, joining in the fight along with the Taskforce.
At the same time, he says the Chamber is looking to offer wellness programs to members that promote preventative care and healthy lifestyle choices that reduce health care costs in the long run. Healthy workers also translate to low absenteeism and higher productivity for businesses, contributing to their bottom line.
Like with attending rate hearings, it is going to take collaboration of businesses to successfully implement wellness programs.
“The business community has to get involved,” Boyle said.
For more information, visit RITaskforce.com, or contact the Cranston Chamber at 785-3780 or at www.CranstonChamber.com.