Theodore Ross, whose company cleans and stores auto parts containers, has cut back the share of health insurance he pays for his employees. Those Dayton-area companies are among the small businesses across the country that are feeling the effect of rising health insurance costs in a slowing economy. Businesses are being forced to reduce coverage, shift more of the insurance costs to employees, or drop health benefits altogether, officials say. Based on complaints she hears and reports that she sees, Sullivan figures the insurance premium increases average 18 percent to 22 percent. Janet Trautwein, director of policy analysis for the National Association of Health Underwriters, said some businesses are reporting premium hikes of as much as 60 percent.
Business owners are worried.
Inflation in the health-care industry, particularly in prescription drugs, is driving up premiums, and there is growing urgency for health maintenance organizations to show a profit, said Michael Sparer, associate professor of health policy at Columbia University. Now, they are trying to recoup them. Fre-Flo Distribution, which employs about 60 workers, used to pay 75 percent of their insurance premiums, Ross says, but that figure is now down to 50 percent. Half of them dropped it altogether. Ross said the reduced benefit has scared away many job applicants and forced him to rely more heavily on temporary workers.