Healing Health Care Costs
Hope for Small Businesses Struggling with Health Coverage

When Saira Roberts goes to the doctor for an ache, pain or annual checkup, she has to pay up to $200, not just a $20 co-pay.

As the sole proprietor of Saira Roberts Bodywork, a Dallas-based massage therapy business, Roberts purchased a bare-bones health insurance policy that only covers major medical expenses. She said she can't afford broader coverage.

"My experience has been what it is for most sole proprietors," Roberts said. "You're not going to get a good rate because it's going to be just you. The premiums are very high."

Every month, Roberts pays a $400 premium, just in case. And she has a $5,000 deductible in case she suffers a major illness or needs hospitalization.

"I'm paying in case something catastrophic happens just so I have insurance," she said. "If you actually have a claim it goes up even more. Mine goes up 15 to 20 percent each year, and I don't have any claims."

Roberts isn't alone in her quest for affordable health insurance. The average cost of health insurance for a small business owner has doubled since 2001, said Dianne Longley, director of special projects for the Texas Department of Insurance (TDI). Longley defined a small business as having between two and 50 employees.

"One of our biggest concerns is that there are so many small businesses that don't offer health insurance," Longley said. "That's contributing to the high percentage of uninsured."

There is a perception that the uninsured don't work, yet 85 percent of Texas' uninsured are in a family where at least one adult works 40 hours per week or more, Longley said. But some help is available for sole proprietors and other small businesses.

Finding Options

Small businesses seeking information on health coverage options can go to TDI's Web site at www.TexasHealthOptions.com for a wealth of links and resources.

Longley also offers the following for small businesses seeking health insurance:

• shop around for an insurance agent who will investigate health care options from a variety of carriers;
• consider the maximum out-of-pocket amount that you can afford to pay for health care for your employees;
• talk to your employees to find out what they want or need in a health plan;
• ask your insurance agent about two new insurance products that are usually less expensive than typical plans. A consumer choice plan eliminates some of the coverages mandated by most plans. High deductible plans offer lower monthly premiums and a wide range of deductibles. Some of these plans offer deductibles of $10,000, and other plans offer lower deductibles; and
• talk to your insurance agent about joining with other small employers to form a cooperative or coalition to purchase health insurance at more affordable rates.

More Expert Advice

Small business owners seeking affordable health plans can tap a variety of existing resources.

Counselors at the University of Houston Small Business Development Center Network (UH SBDC) refer their clients to personal insurance agents, benefit plan specialists, local chambers of commerce, TDI and trade and national associations, said Mike Young, executive director of the UH SBDC.

"Issues for the business owner to consider include the type and limits of coverage, premiums, cost-sharing with employees and the use of high deductibles to lower premiums," Young said.

As mentioned previously, Longley stresses the benefits of employers sitting down with their employees to talk with them about what they want in a health plan. Most insurance carriers require a minimum enrollment of eligible employees. Engaging and involving employees in making health insurance decisions is a good idea, she said.

"Maybe employees are more interested in coverage for typical expenses like when their child gets sick," she said. "Maybe they're not interested in the top-of-the-line Cadillac coverage. If they can settle on something that's less comprehensive or much more affordable, then they can meet those minimum enrollment requirements."

Safety Net

Federal and state laws prohibit insurance carriers from denying a business coverage based on the health of any of its employees, but a sole proprietor seeking an individual policy can be refused coverage if he or she has pre-existing medical conditions, Longley said.

From an insurance agent's perspective, it's easier to find affordable coverage for larger employers, said Steve Wenlandt of Houston-based Selected Benefits Inc.

"The insurance carriers can spread their risk easier around a large group of people," he said. "If you only have a five-person business and one or two of those people are 'high risk,' the insurance carrier must charge more to accept that risk. It's even worse if you have a relatively unhealthy individual."

As another option, a sole proprietor with a history of health problems who can't get insurance in the individual market can seek coverage through the Texas Health Insurance Risk Pool, Longley said. The 1997 Texas Legislature created the pool to provide health insurance to eligible Texans who, due to medical conditions, are unable to obtain coverage from commercial insurers.

To learn more about Texas' uninsured, the impact and options, please read "A Steep Price for the Uninsured".

Karen Hudgins