Hidden costs of insurance hikes

By A.J. Barks

Business Today

Something's got to give. That is the consensus among area employers when it comes to providing health insurance to their employees.

Ann Brookman, President of Edgewater Glass Company in Cape Girardeau says her insurance costs have gone up about 25 percent annually for the last five years. "It is unbelievably expensive," she said.

Vice President at Southeast Missouri Builders Thomas Spitzmiller says his company is facing an over 30 percent increase next year.

Rising insurance prices have many companies reluctantly passing on some of the cost. A survey by the Missouri Chamber of Commerce and Industry found that 40 percent of Missouri companies increased their employee's share of health insurance premiums in 2006 and another 22 percent increased employee deductible levels.

Cheryl Mabuce, Senior Vice President of Capaha Bank, said, "It's demoralizing for the owner for sure, because they have to deal with that cost somewhere." That leaves employers the options of raising deductibles or raising the employee portion of the premium. "It's hard because some people don't use (the insurance) much, but others, unfortunately, have to." Capaha Bank has 76 employees and all but those who are part time or on a spouse's insurance utilize the insurance provided by the bank.

Mabuce said, "We've had to do like everyone else. We've had to make concessions."

Southeast Missouri Builders has also had to raise deductibles. "Nobody's happy about that," said Spitzmiller. "It's a painful thing to have to do to get costs lower. If we don't, we have to have the employee pay more money."

But there is another cost employers may have to consider--the ability to hire qualified job candidates. As health insurance goes up, so may the importance of benefit packages as positive or negative selling points.

"Definitely it is very, very important to most people," said Mabuce. "I can't think of anyone we've hired recently that hasn't been interested in medical coverage." Capaha Bank has made providing health care a priority for its employees. "We've found it a draw and good retainer to offer good health benefits."

Southeast Missouri State University also finds its insurance package appreciated by both current and prospective employees. As Director of Human Resources Jim Cook says, "In our particular case, it helps us probably."

At Edgewater Glass, Brookman said health insurance is not so much a factor in those they interview. Of the few who do ask about a benefit package, they are often middle aged with children. Out of 14 employees, only five take the health insurance option. Some are on their spouse's insurance, but most people just don't want such a large amount per hour taken out of their check, according to Brookman. They would rather have it in their pocket.

Spitzmiller, too, said that insurance is rarely a problem in getting qualified employees.

So while employers across Southeast Missouri are concerned by the incredible increases in the cost of providing health insurance, not all may need to worry that it is impacting the quality of candidate they can hire.