Phoenix Products, Inc.
From the day we started our company 31 years ago, providing health insurance has been a priority. My company has gone through substantial changes, growing from a youthful start-up into a small business with nearly 100 employees and most recently into a smaller, more mature company.
Our “average” employee is 52 years old and has been with the company nearly 16 years. As recently as 2003 we still could afford to provide a plan with a $250/$500 deductible and very modest co-pays for office visits and prescription drugs. The monthly premium for this plan was $218 for a single employee and ranged up to $677 for full family coverage.
But our group was shrinking, growing older and consuming more health care. At the same time, the cost of health care was increasing rapidly. We have had to move away from what was a pre-paid health care plan that covered almost everything to an insurance plan that protects our employees from catastrophic events. Today we have a plan with a $3,000 deductible for a single employee and $5,900 for a family. The insurance company does not pay a thing until that deductible is met. Prescription drugs and office visits are treated like any other medical expense and are included in the same deductible limits. However, our company self-insures a part of the deductible so the actual exposure is limited to $1,750/$3,500 per employee.
Following our 2007 renewal, I learned that we had a covered participant who had been diagnosed with very rare disease which is extremely costly to treat. Our 2008 renewal rates were 35 percent above 2007, the maximum allowed under Ohio laws. At this point we have exhausted all of the plan design options that could minimize our increase. Neither the company nor our employees are in a position to absorb an increase of almost $40,000 in premiums.
In total, the company bears over 80 percent of the total cost of our employees’ premiums, however the increase in the cost of our health insurance has affected our employees over the last few years too. The employee contributions have grown with the premiums. Wage rates have been frozen since 2001, though we do make occasional lump sum distributions of profits as conditions permit. We provide life insurance plus short-term and long-term disability coverage at the company’s expense. Our average employee is now eligible for four weeks of paid vacation in addition to nine paid holidays. We are a family-run business and our employees are part of our family. As much as I do not want to resort to reducing some of these benefits, there are few other viable alternatives to offset the cost of health insurance.
My story is not unique. Small businesses are nearing a cliff, and we cannot continue down this path that creates such a significant competitive disadvantage globally and among larger businesses in our industry.