Nine employees rely on a group health insurance plan offered by B & F Fabricating in South Chicago Heights. But co-owner Frank Bednarek worries health care reform being considered by Congress could drive up costs, affecting the company's ability to offer insurance.
Overhauling health care could require most business owners to offer health insurance for their employees, just as many say they're already being squeezed by insurance premiums and the recession.
"We're Waiting to talk to our agent about what might change for us," Bednarek said. "We're worried we're not going to be able to have insurance anymore - the type we want, anyway."
The company pays most of the cost of providing health care coverage to employees and their families. Premiums stayed steady this year, but were raised sharply last year because the group filed some substantial claims.
It's a bad time to increase costs for small businesses, said Glenn Horton, president of the Horton Group, an Orland Park-based insurance brokerage with about 5,000 small business clients. Those businesses, categorized as having fewer than 100 employees each, are feeling the recession's pinch.
"(Business owners) are punch-drunk generally," Horton said. "Business is down. Taxes are up. The feedback we're hearing is, 'How much more can they take out of our wallets?' They're (Congress) trying to solve this problem at the wrong time."
Rick Klein is Horton Group vice president and vice chairman of economic affairs on the executive board of the Chicago Southland Chamber of Commerce. He said while most small-business owners understand the need for health care reform, they worry they will bear the brunt of the cost.
If the final law requires businesses to offer health insurance or face a penalty, the bottom line for small business might come down to simple math.
"Any smart CFO (chief financial officer) will take a look to see what they're paying (for health insurance) vs. the penalty they'd have to pay, and make an economic decision," Klein said.
"They'd pay the penalty and send employees to the public option. Then they don't have to worry about administration either." However, Klein said, many business owners know there is an intangible value to offering health insurance - it brings in better employees and helps keep them motivated, healthy and working.
"If I (as a business owner) drop employees and put them under the public option, and that collapses under its own weight or employees aren't getting good plans, that's not good for them," Klein said.
Larry Seida's family has understood the benefit of employee insurance since it started offering it to workers at Riverdale Auto Body in the late 1970s. Now with 95 employees at eight locations around the area - six on the South Side and the south suburbs - Seida isn't sure what to expect from the reforms.
Since they already offer insurance, their business shouldn't change much, unless their plan fails to meet government requirements. Seida worries the reforms might drive up his premium cost, which is always on the rise.
"Our premium is going to be 9 percent higher next year, and we're a 'good group,' they say," Seida said. The company has had a low number of claims.
Congress is mulling providing subsidiaries for small firms to provide health care coverage to workers. Seida said he thinks that would be fair in the face of an insurance mandate.
"If (insurance) gets forced on you, yes, you should get subsidies," he said.
Business owners will have to wait with the rest of the country to see what Congress settles on. Tom Hall, Southland Chamber chairman, said anything that creates additional costs for businesses is no good.
"Based on the existing bill approved by the House, we're concerned it will add costs to businesses," Hall said. "Others feel there's an opportunity to move expenses away from businesses and maybe get them out of the health care provider business altogether."
Things To Know
Small businesses pay higher premiums
According to Rick Klein, vice president of the Horton Group in Orland Park, small business health insurance groups pay higher premiums than those of large businesses because of the way insurance companies assess risk:
- Because there are fewer people in the group, the risk is spread across a smaller sample. One member's claims affect the whole group's premiums.
- They usually have shorter company histories, offering less experience with which an insurance company can make a risk analysis.
- Larger groups pay more in total premiums, so they have more of a cushion to pay claims.
Proposals for small business
From the Senate bill:
- Companies with more than 200 employees are required to automatically enroll employees in plans.
- Companies with more than 50 full-time workers that do not offer coverage would pay a fee as high as $750, multiplied by the total size of the work force, if the government ends up subsidizing employees' coverage.
- Tax credits for small employers.
From the House bill:
- Employers must provide insurance to their employees or pay a penalty.
- Companies with annual payrolls under $500,000 are exempt from the penalty. The penalty is phased in for companies with payrolls between $500,000 and $750,000.
- Businesses with 10 or fewer workers get tax credits to help them provide coverage.