For quite a while, our architectural firm has offered medical coverage through Empire Blue/Cross Blue Shield, a pretty decent health plan geared toward small business owners that does not require referrals. At the beginning of December, just after renewal period closed, we were disturbed to learn that the company was in essence pulling out of the small business market in New York state.
We’re pretty much left now with three major carriers offering coverage nowhere near what Empire has, with deductibles and premiums so high that they may become too cost prohibitive for our eight employees to enroll in the plans. Unfortunately, the action by Empire could be a harbinger of what we could see under the new health care law.
If Empire Blue Cross/Blue Shield leaves the New York market entirely, the state insurance department would exclude it from participation in the insurance market here for three years. Therefore, officials decided to hold onto the option by offering very high cost plans that they expect would have very few participants in order to maintain their ability to bid in the New York state market.
Empire pulled out of the market because officials felt they will be subject to specific requirements forced upon them by the government and that there just wasn’t enough profit margin in this market to make it palatable. Other insurance companies will probably follow suit.
Those insurance companies remaining will have higher premiums and deductibles. I fear that the co-pay on an emergency room visit may reach as high as $750 or $1,000. Employers are going to find that the only insurance they can afford is the one the government can provide.
Businesses with 50 people and more have a lot more options. But smaller businesses have a smaller pool and a greater chance for a more huge liability for the insurance company if you have one or two people with catastrophic events happen during the policy year.
With Empire’s decision, we’ll have to switch to a new provider by April 1. We already were facing a 17 percent increase with Empire. Now we’ll have another 2 to 3 percent increase when we move to another insurance company.
Our dilemma is we may have to raise an already burdensome contribution rate to employees still dealing with stagnant salaries caused by a very bad economy on Long Island. It is already an entangled mess costwise to provide an important benefit and maintain talent but now we have to deal with another series of thinning medical benefit options as well.
We’re very apprehensive and concerned about what’s going to happen with the health care law. We’re doing our research now and taking a wait and see approach as to the financial impact it will have on us. We’ll make those decisions based on what makes sense fiscally for our company and how best to meet the needs of our employees while still trying to remain competitive.
We’re bracing ourselves for the 2012 renewal period, walking on egg shells, wondering who will pull out next.
Tom Cromer is chief financial officer of Baldassano Architecture in Patachogue, N.Y.
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