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Small businesses, big insurance bills

Ever increasing medical insurance premiums are putting a heavy strain on businesses and their employees.
November 18, 2003

Donna Smith and Hank Sisk don't need anyone to remind them about the importance of health insurance.

The owner of Ad Lib Advertising in Eugene, Smith is a colon cancer survivor. She employs Sisk, who is fighting for his life against a rare cancer with a high mortality rate.

Sisk, married with two young children, has a gastrointestinal cancer that filled most of his abdomen with a tumor. He began chemotherapy four weeks ago, hoping to prolong his life.

"The insurance is huge," Sisk, 37, said. "I never would have been able to get the treatment that is saving my life right now without it."

Ad Lib has just eight employees, but Smith said she's committed to providing them with generous medical insurance that in Sisk's case will pick up the initial $50,000 chemotherapy tab.

Yet the number of small companies offering health insurance to workers is declining in the face of steadily increasing medical costs.

In Lane County, many business owners are facing premium increases of 10 percent to 20 percent, the fourth consecutive year of double-digit hikes for some firms.

That's making it tougher for employers to keep up their level of coverage for employees, insurance experts said.

Nationally, private health insurance premiums have risen from 8.2 percent to 14 percent in each of the last four years, according to a survey by the Kaiser Family Foundation and the Health Research and Educational Trust. The rising premiums reflect, in large part, increased costs of pharmaceuticals and the large numbers of baby boomers needing more medical care as they age, experts said.

Small employers are reacting in a variety of ways, from reducing coverage to asking workers to shoulder greater co-pays for treatment, or greater shares of insurance premiums. Or the companies are absorbing the costs. That squeezes profits.

From 2001 to this year, the percentage of covered employees in firms with less than 200 workers dropped from 58 percent to 53 percent, the Kaiser survey found, while coverage at big firms stayed about the same.

Large firms generally have greater financial resources than small companies and can negotiate with insurers. Big firms typically tend to cover more of their workers with health insurance than small firms do, according to the Kaiser survey.

Smith's battle with colon cancer 13 years ago cost her insurance carrier about $30,000. She now gladly pays all of the premiums to cover Sisk and seven other full-time employees. Two part-time workers do not get health insurance.

The cost of major medical care "is an albatross for anybody who is ill," said Smith. "The medical expenses are enormous, and if you don't have health insurance, you'll have debt for the rest of your life."

Ad Lib's medical insurance premiums through Springfield-based PacificSource Health Plans costs the firm about $32,000 a year, Smith said. That's on top of an annual payroll of about $350,000, she said.

Ad Lib's premiums next year might rise anywhere from 7 percent to 15 percent, said the firm's insurance broker, Rick Marquess of Marquess Insurance Services in Eugene. Ad Lib is a small employer, and medical claims from its workers are spread among PacificSource's other customers, which prevents Ad Lib's premiums from shooting up dramatically if one of its employees - such as Sisk - undergoes costly treatment.

Smith said the continued premium escalations may eventually prompt her to ask employees to pick up a share of the premiums. "But there is no way we would drop it" as a benefit, she said.

Sisk is grateful that he landed a job as a video editor at Ad Lib in March. Two months earlier, he had lost his position as advertising production manager at Troutman's Emporium, where he had worked for 14 years.

Emporium, the Eugene-based retail chain, went bankrupt last December and terminated more than 1,000 employees, mostly in Oregon and four other states.

Sisk lives in Cottage Grove with his wife, Manesseh, an employee of SkyWest Airlines, and daughters, Marissa, 3, and Haley, 2.

He estimates the initial chemotherapy treatments will cost about $50,000, which PacificSource agreed to cover.

Sisk's oncologist, Dr. Andrew Monticelli, said its unclear whether Sisks' cancer originated in his appendix or pancreas, which makes the choice of the chemotherapy drugs somewhat experimental.

"Some insurance companies that are very picky could have refused to pay for the drugs that OHSU (Oregon Health Sciences University) recommended based on the uncertainties of (Sisks') diagnosis," Monticelli said. "PacificSource readily agreed to pay for his treatment because there was a compassionate person on the other end of the phone."

But Sisk's insurance doesn't cover everything. His personal costs - including prescription drugs and vitamins to help him fight the cancer and deal with the side effects of chemotherapy - put his family about $5,000 in debt.

Friends, including former Emporium colleagues, fellow Eugene Rotarians, and church members in Cottage Grove, responded by organizing a fundraiser last week at Papa's Pizza parlors in Eugene-Springfield. The event raised $5,000, erasing the debt, but Sisks' out-of-pocket-costs will continue.

When he received the diagnosis in September, Sisk said he was told the cancer had advanced too far and was inoperable. But so far, the chemotherapy appears to be reducing the tumor, he said. Now, surgery is a possibility.

A naturally upbeat person, Sisk does his best to stay positive. "I've got a pretty good fighting spirit about the whole thing," he said.

Sisk works at Ad Lib as much as possible, except when he is taking treatments or feeling too poorly.

"If I am sick and I can only come in for work at 10 instead of 8, they understand," he said. "I have never worked at a place that has bent over backwards like the people here. Until you get sick and have cancer, you really don't understand how important that is."

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PID... 19.Nov.2003 07:54

Steve Thomas

Public Insurance District? If we want to get rid of big insurance premiums small businesses have to pay we need to take the profit out of insurance. I recommend forming a Public Insurance District. This would provide universal insurance coverage to all at an affordable price.