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Small businesses search for affordable health insurance plans

Shannon Lundgren offers health benefits to her two full-time employees at Bridger Kitchen Interiors on Main Street.

By KAYLEY MENDENHALL Chronicle Staff Writer

But with insurance premiums increasing by as much as 20 percent every year, Lundgren said it isn’t easy.

"I offer it as an added benefit to ensure longevity with my employees," she said. "It continually rises — 20 to 30 percent a year for the last few years — so it is getting harder."

Many small business owners are in a similar situation. They know that offering health insurance helps attract and retain quality employees, but they can’t always afford to pay the high price.

"A lot of employers are probably hearing from employees that an increase in their wages would be nice, but what they would really like is better benefits," said David Smith, executive director of the Bozeman Area Chamber of Commerce. "We have an 18 percent uninsured rate in the state."

Montana has a higher rate of people without health insurance than the national average of 14 percent for several reasons, Smith said. The state’s small population and numerous legislative mandates make offering health insurance here a risky business.

"When you have a large population base, the risk can be spread farther," Smith said. "Montana is not a competitive state for health insurance."

State law mandates that even Smith, a 42-year-old man, be covered for pregnancy care, he said.

Several health benefits are required in Montana that raise premiums and don’t apply to every patient.

Montanans also have fewer choices of insurance carriers than large, metropolitan areas, said Steve Garcia, an independent insurance agent and owner of Professional Health Planners.

The big national insurance providers like Cigna, Massachusetts Mutual, John Hancock and Aetna don’t do business in Montana. They only serve companies with 500 or more employees, Garcia said.

"We don’t have companies that big to make it worth their while," he said, explaining the problem in Montana keeps getting worse. "Benefits have gone down, rates have gone up and employers are shifting costs to the employees."

For the first time in his insurance career, Garcia said, this year he put together a plan for a 30-person group where the family premium was more than $1,000 a month.

"When you’re talking about $12,000 a year, that’s a tough number to come up with," he said. "Often times what employees don’t realize is that if an employer is paying that much toward a premium … they are not paying it toward salaries."

In order to help small businesses deal with their health insurance woes, Smith said the chamber is looking into the insurance business.

"It’s one of the top three issues for us this year," Smith said. "We’ll be getting something out there that will make our members more profitable."

Smith has been talking with New West and Blue Cross Blue Shield insurance carriers about what kind of a discounted plan they might be able to offer chamber members. The idea is that small businesses could use the purchasing power of the relatively large chamber membership to get lower premiums.

"The Chamber and David Smith will not be getting licensed to sell health insurance," Smith said. "But what the chamber does really well is marketing. The chamber exists to help our members be more profitable."

Companies with 50 or fewer employees would qualify for one of the plans Smith is considering. Rates would be set according to the individuals in each company, but an overall premium discount of about 5 percent would apply to members.

Lundgren said she would be interested in learning more about the chamber’s insurance proposal. The carrier she buys insurance from now follows a similar principle by putting her in a pool of national companies and making the price more affordable.

"If I was just to do it within our own business it would be astronomical," Lundgren said.

Other than purchasing pools, small business owners have a few options for cost shifting when it comes to health insurance, Garcia said.

Many employers offer what’s known as a cafeteria or flexible benefits plan, which gives employees the opportunity to choose from a selection of benefits and use pre-tax dollars to pay premiums and out-of-pocket medical expenses. The tax savings from a cafeteria plan can save the employee up to 25 percent, Garcia said.

Two of the insurance carriers Garcia uses most often offer a co-pay system.

"They could offer a $25 co-pay with 100 percent coverage of physicals, Pap smears and well-child visits. They also have a prescription card where it costs $15 for generic medications and $25 for brand name," Garcia said. "To keep the costs down premium-wise we usually suggest a high deductible of $1,000 or $2,500 to make it affordable."

No matter what plan they choose, Garcia said, employers historically put health plans in place to be competitive with peer businesses.

And as health insurance premiums keep increasing, Smith hopes to help his chamber members get the competitive edge.

http://bozemandailychronicle.com/articles/2003/04/20/news/health%20insurancebzbigs.txt

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