posted
Our business liability and workman's compensation has gone up so high we can't pay it anymore.
Nor are we alone - we know four businesses that have folded in the last few months. And one that laid off half its workforce - all of them cited the rise in insurance premiums as a major factor.
Of course, working without insurance is not a good thing to do. We laid off two workers (half our workforce) and are seriously considering shutting down altogether.
We've been shopping around, and no one has rates we can afford. One quoted 12% of last year's gross. We don't even make that much profit.
Another quote was for a monthly premium that was more than the combined salaries of the two men we laid off.
If you're wondering what we did to increase the premiums - absolutely nothing. We've had only one claim on liability in six years and it was for less than $2000. It was also more than two years ago. We've never had a claim on workman's comp.
It's gotten to where I just cry in frustration. For six years my husband's worked to build a business with hopes of having something to pass down to our children, and we're at the point now where it's no longer worth it. Between taxes and insurance and the licenses and fees (we pay thousands of dollars a year in business licenses and paid out over $5000 last year in permit fees) there's just no money left at the end of the day for us. He'd almost make more money flipping hamburgers at McDonald's.
Not worth it. So once again, for the second time in about a year, we're looking at closing shop and selling all our equipment. He talks to someone tomorrow about a job with them. Which would mean letting our other two employees go, which I hate. These guys have families just like we do. But what can you do?
I swear I think the deck is stacked against small businesses. At least in the construction industry. One friend of ours said their workman's comp hasn't gone up and it's quite reasonable. I told him I was sure it was - since he was a payroll company with only office employees. Not so in the construction industry. If this keeps up no one is going to be able to afford a house - because the contractors are all going to have their prices so much, and all that will be left are the big companies - the little ones like us will all have been driven into the ground. Posts: 14428 | Registered: Aug 2001
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posted
I didn't see any "here's why it's happening" stories right offhand, but a Google search for "rising insurance premiums small businesses" brought up an awful lot of similar stories.
Also various legislation in the works to band-aid it.
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posted
I suspect the insurance rise may actually be due to some bad and overly conservative investments on the part of insurers.
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posted
Well, even if there is a bandaid - we're done.
It's just too much stress for too little payoff.
Wes has already talked to someone who has offered a job, they're just meeting tomorrow to hammer out specifics. He wants Wes to work for him (he's been pursuing him for more than a year) and we've been tempted before - this time it's a no-brainer.
Operate a business that's losing money or work for someone else for a steady salary? gee...I wonder which one makes the most sense.
Posts: 14428 | Registered: Aug 2001
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1) The cost of civil suits has been cited as one factor, but it's not really all that big of one. The insurance industry has been using the issue, however, to press for legislation to cap awards in civil suits.
2) Industry profits are down a bit and that's got the insurance companies trying to figure out new ways to boost the bottom line.
3) Many states have ceased to effectively regulate their insurance industries. The companies that work nationally have a few tactics they use: refusing to take new customers in a state, cutting deals where there are parts of the state that are unregulated (or people there just can't get insurance), and trying to force states to pass laws that benefit insurers. When they can't raise prices in a highly regulated state, they have to do it somewhere else. The deregulated states suffer.
But don't worry. The free market will correct all of this.
Sorry about your business, Belle. That sucks.
Posts: 22497 | Registered: Sep 2000
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posted
It's funny - I'm upset but relieved at the same time. Man, it will be good to have a regular salary coming in. And the responsibility we feel for our employees - it's a big one. There have been pay periods where we paid them out of our own pocket because the business didn't have enough in its account. Just to know that their paychecks aren't our responsibility anymore is a huge relief.
Wes is calling in every favor he knows to help find them other jobs - it's tough because so many companies are laying off folks too. We think we've found a position for one of them.
At the end of the day we'll be all right. We may even be better off financially when all is said and done.
It does suck because we had hopes of building something that would last and would be there to hand down to our kids - but closing it down is the right thing for the family right now.
I just keep thinking about people who aren't in as good a shape as we are. After all, this was our secondary income - we still have the income Wes makes as a firefighter. One day I'll be working again. What about people whose business is their sole source of income? I know people like that - a member of our church has a landscaping company and is facing the same crisis we are - unable to pay premiums and unable to operate without them (no one wants to be without insurance - too big of a risk)
He has no other source of income. So, while I know we'll be fine, I'm upset for those that may not be. And angry that it came to this. So much work and effort over the last six years to have to shut down not because we couldn't hack it, not because we weren't doing jobs and doing them well, not because we ran out of work - but for insurance premiums.
Posts: 14428 | Registered: Aug 2001
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We notified everybody, and our employees came by and dropped off all the equipment that belonged to us.
Two of them, who are licensed plumbers, may continue to work. Some of our contractors have indicated they'd let them keep on the jobs, and Wes agreed to help them out by pulling permits and such where needed.
It was very sad. A bit traumatic for both of us, but it's all done and over with. He has a new job, will wind up making more money for less stress. So, more than likely we'll be okay when all is said and done. It's just emotionally tough, even when you know you're doing the right thing for your family, to let go of something you've worked so hard on, and to let the dream of being a successful business owner die.
My sister-in-law is a CPA who specializes in small business accounting and she told us our story is not unique - she's been part of shutting down more than a few small businesses this year.
Man it's frustrating - to know you weren't beaten by competition, you were regulated to death. Between insurance, taxes, fees, licenses, it was all just too much.
Posts: 14428 | Registered: Aug 2001
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posted
Belle, I'm so sorry for you guys. That really sucks. It like the death of the American Dream, really. You'd think this country above all would reward that kind of enterprise and initiative, but sometimes it seems like the system is rigged to make millionaires into billionaires at the expense of everyone else.
Posts: 6394 | Registered: Dec 1999
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posted
I'm sorry to hear you guys had to let go of your dream. I'm glad though that Wes was able to find a job and that everything will work out pretty well.
I can understand how frustrating it is. I work for a very small company (there are 3 of us, including my boss, here full time) and my boss often complains about what a huge drain the taxes and insurance are. In our case health insurance has been the major problem (I've not heard of huge increases in our workman's comp and other insurances). I know that this year they wanted to basically double our rates. It is absurd. I guess we are lucky that we are not in the construction industry. Our business and income has been staying ahead of the costs of operation enough that we are moving to a larger facility next week, with possible plans to hire another person. It is scary to me though to think of what would happen if we had a bad year.
Posts: 5879 | Registered: Apr 2001
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posted
Belle, I am so sorry. I also own a business and can identify with what you are going through. Best of luck with everything.
This is probably not the thread for a discussion about the free market....but since Bob brought it up I just have to point out the irony of his statement. Did it ever occur to you Bob that the reason the free market can't correct the problem is precisely because it is not a free market in many places? Just asking. Posts: 127 | Registered: Feb 2005
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posted
First of all, I had no idea things were so bad for small businesses. You have my sympathy, Belle, and I'm sorry it had to come to shutting down the business. I'm glad you guys will be okay, and it's nice to hear that you care so much about your employees.
Second of all, Holden, what do you mean by not a free market in many places? I'm not challenging, I just would like some clarification. Do you mean it's not free because of the regulations?
posted
You still can Farmgirl - but you will have to be aware of the costs involved as they pertain specifically to your business.
Workman's Comp in the construction trade is absurd because it's a relatively high risk field and insurance companies are...yes, well...I don't have a good opinion there.
The regulations and whatnot will also vary by location, which is another factor to take into consideration.
posted
"Did it ever occur to you Bob that the reason the free market can't correct the problem is precisely because it is not a free market in many places?"
Which regulation, holden, do you think is needlessly inflating insurance costs?
Posts: 37449 | Registered: May 1999
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posted
Actually, I predict a free market in insurance would be heavily prejudiced against small businesses. Larger businesses do deal in economies of scale, and their bureaucratic structures will keep transaction costs down for insurance companies doing business with them, where with small businesses the bureaucracy must exist much more on the insurance company end.
Posts: 15770 | Registered: Dec 2001
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posted
A free market? When insurance company execs are being indicted for collusion?
Hmm...I think the best we could hope for is them eventually deciding that it's not in their best interests to bankrupt EVERYONE in order to line their own pockets.
Posts: 22497 | Registered: Sep 2000
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quote:When they can't raise prices in a highly regulated state, they have to do it somewhere else. The deregulated states suffer.
Being unable to raise premiums because of governement regulations is exactly the opposite of a free market.
Posts: 127 | Registered: Feb 2005
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posted
"Free market" does not merely refer to absence of government regulation. It requires free information exchange as well as free association.
Actions of vendors can make a market less free, as can actions of purchasers.
Government regulation can make a market more free. For example, a requirement that health insurance companies create an "open group" and allow anyone to join it at published rates would make a more free market than we have now. Efficient insurance companies would do better under such a system.
However, it is the case that certain government regulations can hinder availability of insurance to small business. Some small businesses have to choose between lesser insurance coverage and none; many states make such a tradeoff impossible by requiring certain levels of coverage.
posted
Seems to me that the logical solution to insurance companies raising premiums in unregulated states is to make ALL states regulated. Insurance costs are insane. For our health insurance, my employer and I pay a combined $750/month, for only two people. Maybe that's not a lot of money for insurance--I honestly don't know. I have nothing to compare it to. But I DO know that it's a lot of money to ME. I have fairly good insurance. $20/office visit, 100% wellness visits, and 90% in-network care. With a $300 deductible per person, which is only applicable to certain things.
Unless we get really sick, I'm fairly sure that even with having several doctor's appointments a year, we'll pay the insurance company far more than they have to pay for us. Far more.
But that's why they call it insurance.. yeah..
The ironic thing is, we pay more for healthcare WITH insurance than we did last year without it. Of course, then we simply couldn't pay the bills.
posted
We essentially had no choice in the matter - even if we were willing to go without insurance, we couldn't get any jobs. The general contractor has to provide workman's comp on the job if his subs don't have it - the generals can't afford it either, so they only hire subs with insurance. If we had continued to operate without insurance, we would have been out of work soon enough anyway.
I'm so angry about it all I could scream.
Posts: 14428 | Registered: Aug 2001
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Okay, let's say that having insurance is like making a bet. I'm betting that I will need to use it, and the insurance company is betting that I don't. So, why is it that when I "win" the bet and need to use it, the insurance company raises my rates?? (Such as with auto insurance--like when the accident was NOT my fault.) What justification do they have to raise my rates when they lost the bet? Sore losers is what they are.
posted
One needless regulation that I have had personal experience with (probably not relevant to Belle's situation) is that in some states the government requires health insurance companies to cover pregnancy. Every policy issued to a female must cover pregnancy whether she has any intention of becoming pregnant or not. This forces women that don't get pregnant to subsidize the insurance premiums of those that do.
Posts: 127 | Registered: Feb 2005
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quote: Government regulation can make a market more free. For example, a requirement that health insurance companies create an "open group" and allow anyone to join it at published rates would make a more free market than we have now. Efficient insurance companies would do better under such a system.
I've heard a program on NPR where an insurance company executive explained how this would be bad because insurance companies would simply stop doing business in any state that required them to do open group, and how "most people" would end up paying more for insurance than they do now.
It sounded logical as he was saying it, but it also didn't make sense five minutes later. I mean, if the market is large enough, they could figure out a way to make money, no?
Surely if ALL states went this route, the industry would adjust...
It's just that now they don't have to.
Posts: 22497 | Registered: Sep 2000
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quote: One needless regulation that I have had personal experience with (probably not relevant to Belle's situation) is that in some states the government requires health insurance companies to cover pregnancy. Every policy issued to a female must cover pregnancy whether she has any intention of becoming pregnant or not. This forces women that don't get pregnant to subsidize the insurance premiums of those that do.
Yes, because we all know that only women who intend to get pregnant actually get pregnant. And we also all know that insurance companies would NEVER EVER refuse to cover a pregnancy. After all, it is preventable and the woman CLEARLY intended it. If I jabbed a pen in my eye intentionally, why should the insurance company cover it? Why would any woman voluntarily inflict such trauma and stress on her body by getting pregnant? AND, after that, that little rugrat is probably going to need insurance, too. Little SOBs.
quote:Unless we get really sick, I'm fairly sure that even with having several doctor's appointments a year, we'll pay the insurance company far more than they have to pay for us. Far more.
The vast majority of people have to pay more for health insurance than they get out of it each year, or the system wouldn't work. You pay $4200 per year, probably a max of $5000 counting a LOT of co-pays and deductibles.
If you paid the max, you probably would be getting more out, but let's use $5000 per person per year.
One person with a $50,000 bill will offset about 9 other people who get NOTHING out of the insurance plan. As a whole, those 10 people will cause the insurance company to break even, nothing more.
If each person got $2500 out of the insurance company, 19 people will be needed.
posted
I'm sorry, Belle. I really admire people who go into business for themselves because it is so tough. I think I am a person who isn't brave enough to face the frightening odds and would prefer "safety" with a steady salary. But that's just timid ol' me.
Hope you are pleased with how things turn out.
Posts: 7050 | Registered: Feb 2004
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But what about them raising rates? (Although I'm not sure that my medical insurance would go up because I use it--since it's through my employer, everybody pretty much gets the same rates according to their plan.)
I am talking about something I know little about. I just wish I had more of my paycheck to take home, that's all..
quote:I've heard a program on NPR where an insurance company executive explained how this would be bad because insurance companies would simply stop doing business in any state that required them to do open group, and how "most people" would end up paying more for insurance than they do now.
It sounded logical as he was saying it, but it also didn't make sense five minutes later. I mean, if the market is large enough, they could figure out a way to make money, no?
Surely if ALL states went this route, the industry would adjust...
It's just that now they don't have to.
Exactly. If all states did this, someone would make money off it. I'm not averse to this group having a higher rate than other groups, as long as the difference can be supported with actuarial tables.
For example, anyone who wanted to offer a federal health plan could be forced to provide the same coverage for 10-25% more to anyone who wanted it.
The hardest thing for me to figure out is how to handle pre-existing conditions. There needs to be some way to keep someone from gettng insurance for 3 months just to handle a particular condition, but it's unfair to penalize people who have had to delay medical insurance for financial reasons.
posted
I am deeply deeply greatful that we didn't have to worry about pre-existing conditions when we got insurance through my work. Since I was a new employee, legally the insurance company HAD to take us. If that wasn't the case, then my husband could have never gotten health insurance for certain things. And that would have been bad, sad, and maddening.
quote:But what about them raising rates? (Although I'm not sure that my medical insurance would go up because I use it--since it's through my employer, everybody pretty much gets the same rates according to their plan.)
I am talking about something I know little about. I just wish I had more of my paycheck to take home, that's all.
There's something very different about the way auto insurance is handled. They're allowed to discriminate on age and sex, whereas health insurance isn't (within a group, anyway). Bob, do you know if the extra risk associated with being a young male driver is greater than the expected higher costs for child-bearing-age women in medical care?
I'm sure Bob knows more about how one accident or one ticket works out for increased risk of future accidents.
Dagonee P.S., I don't advocate charging more for women of child-bearing age, BTW.
Posts: 26071 | Registered: Oct 2003
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quote: The hardest thing for me to figure out is how to handle pre-existing conditions. There needs to be some way to keep someone from gettng insurance for 3 months just to handle a particular condition, but it's unfair to penalize people who have had to delay medical insurance for financial reasons.
This is the hardest thing. Under many policies you can not receive treatment for a pre-existing for a certain amount of time to be eligible for the plan. Well that just isn't possible for some people, like my son for instance. If he didn't receive medication or treatment for his transplant for any length of time he would reject his heart, need far more $$ procedures and very likely die. But there is absolutely no way we could pay out of pocket for his expenses. Just one of his medications is over $700 a month All 4 medications total just over $1000 a month. As much as I hate having to take government help we have to have him on state medical because otherwise he would die. We have no means, especially while we are both in school, to support three growing children and ourselves and keep S in medication. Sigh. I hate insurance worries.
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quote: And we also all know that insurance companies would NEVER EVER refuse to cover a pregnancy. After all, it is preventable and the woman CLEARLY intended it. If I jabbed a pen in my eye intentionally, why should the insurance company cover it?
I am only saying that the government is interfering in our freedom of choice leading to inefficiency. I don't believe that women who can't or don't want to get pregnant should be forced by the government to pay for those that do. Dag's example is much better one and more relevant to the situation. When the government mandates that insurance companies cover events that a person or business does not consider an insurable need, premiums are forced higher. This has nothing to do with insurance companies being evil. They exist to make a profit like every other business. Individual companies and people in any industry have and will push the limits of ethical havior. Sensible government regulations should be in place to punish collusion and other anti-competitive activity.
Posts: 127 | Registered: Feb 2005
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posted
Actually, I seriously doubt that the cost of the overall risk of being a young male driver is higher than the cost of being a woman of child-bearing age. Per capita, more of these women will have babies in any given year than young men will have serious traffic accidents resulting in severe injury or death.
I think... Never done the comparison, but I think our annual number of births far outstrips the number of serious accidents.
I think the cost of a pregnancy is in the $20,000 range, of which insurance would pick up something like 80 to 90% right?
How many child-bearing-age females are in the population? How many children are born each year? To how many women???
the cost of a traffic fatality is $1 Million up to $4 million depending on what's included in the estimated costs. But there are only 42,000 of them per year (only?!!! ) Most traffic events are relatively minor and the cost estimates for the injuries are let's say, about $20,000 (to make it comparable. But how many of those events are caused by a young male driver?
If we compared THAT number to the numbers we got for # births to how many females of child-bearing age, I guess we could figure out the costs.
The thing that worries me about this is that really EVERYONE should contribute to the insurance pool for births. We want them, right? This is what a society is all about, isn't it? I mean, even if people said they don't want children, they wouldn't want a society without children...
It's a cost of having a society. It's not an illness.
Sheesh.
It's like education, people wouldn't want to only have parents fund education, would they? Surely society benefits from having educated children...
I don't think pregnancy should be entirely a health-insurance issue. We should have a minimum standard of care for all pregnant women and it should be funded by society as a whole, not be only for those with health insurance and not paid for only by those who MIGHT get pregnant.
quote: That is pretty stupid. Almost like charging people who don't get sick to pay higher premiums to cover the people who do get sick.
I don't consider pregnancy an illness, do you Bob? The point is that insurance companies in some places can offer women a choice: You can buy policy A that does not cover pregnancy for $200 per month, or you can buy policy B that does cover pregnancy for $400 per month. How is it more efficient or better in any way to have the government mandate all women to pay $300 per month? Getting pregnant is not like getting cancer. You don't just wake up one day pregnant through no fault of your own. If you feel you have an insurable risk, pay for the insurance, if not the government shouldn't force you.
Posts: 127 | Registered: Feb 2005
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quote:I don't think pregnancy should be entirely a health-insurance issue. We should have a minimum standard of care for all pregnant women and it should be funded by society as a whole, not be only for those with health insurance and not paid for only by those who MIGHT get pregnant.
I like this.
Can I be in favor of socialized medicine and still be a conservative??
quote:The point is that insurance companies in some places can offer women a choice: You can buy policy A that does not cover pregnancy for $200 per month, or you can buy policy B that does cover pregnancy for $400 per month.
Except it wouldn't be $200 and $400. Just by the selection the insurance company would know that the people opting for the higher insurance are very likely to have children. So the difference would likely be in the $500-$1000 range.
Besides, this would keep men from ever sharing the costs of pregnancies, which would seem to require partitioning off all the different possible risks. Which would render many people uninsurable.
Dagonee Edit: Thanks for that info, Bob. I figured that's how it would come out, but had no way to actually figure it out.
posted
Sorry Kat - the instant you hold two views, one belonging to one side of the political fence and the other on the opposing side, you get shifted to "moderate" by default.
posted
Oh. I can live with moderate. I've thought of myself as moderate before.
I'm usually just puzzled... like how I can agree with them liberals on so many things but be so annoyed by them at the same time. I also agree with the conservatives on so many things.
Guns Good. Environment Good. Low Taxes Good. Socialized Medicine Good. Small Government Good. Equal rights good. Affirmative Action bad. Legalization good. War necessary. Diplomacy good to a point..
quote: Except it wouldn't be $200 and $400. Just by the selection the insurance company would know that the people opting for the higher insurance are very likely to have children. So the difference would likely be in the $500-$1000 range
Sorry Dag, not true at least not in all cases. A couple of months ago it looked like we would be moving to Washington state. In Washington you have the choice between pregnancy benefits and no pregnancy benefits. We are currently having children and the choice with benefits was roughly $200 to $300 more per month. I'll have to see if I can find the exact quotes. This makes sense to me because the cost to have a healthy baby is closer to $4,000 - $7,000 (at least in Utah) so you are paying an additional $2400 per year and you obviously are not going to get pregnant every year.
Besides Dag, should you not pay a higher premium if you are more likely to have an expensive event that you are in control of occur?
posted
Yeah the ultimate hypocrisy though is that even though they charge us all for pregnancies many companies won't pay for women's birth control, just for birth control, and even if you have an actual medical issue requiring it (PCOS for example) you have to fight to get it covered.
posted
By the way, in Utah you can't buy private insurance (for people that are self employed) that covers maternity. The delivery and doctors visits for our last child about 2 years ago cost about $5,000. Our insurance would have covered us if there had been complications. This makes sense to me. The purpose of insurance is to cover events that we have no control over that could lead to catastrophic financial losses. I know that pregnancy is not always predictable and so having insurance for it is not completely without merit, however it seems obvious to me that it should cost more and not be mandated by the government.
Posts: 127 | Registered: Feb 2005
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posted
holden, that sounds awfully low for pregnancy-related costs. Might be in Utah it's cheaper, or maybe I've just misremembered the numbers.
I've heard things in the $20,000 range as "normal."
I know people who got ALL their maternity care via the emergency room precisely because they didn't have coverage and ERs can't refuse you care.
Of course, the woman ended up with a serious post-natal infection and might've died. But she didn't so...it's all okay...
NOT!
I think the best way to pay for prenatal and maternity care is socialized medicine. Proper care all through it for everyone would probably save money if we totalled it up.
Insurers and hospitals would like it.
If you limited lawsuits to actual damages, you could probably also solve the worst of the malpractice insurance costs -- Obstetrics. Basically, there are still going to be problems and people might sue to get medical bills covered...for life...but the pain and suffering part of it is just not affordable by society, IMHO.
Any doctor with a pattern of bad outcomes should be investigated.
Any found to be truly incompetent should have their license pulled.
Posts: 22497 | Registered: Sep 2000
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posted
The probability is that most health insurance in the US will end up just covering catastrophic illness & injury. The costs for universal coverage are just too high to be affordable.
it makes sense to me. Except that I much prefer socialized medicine with safeguards against abuse. The system that keeps everyone healthier is the preferred one. My fear is that if everyone has to pay full freight for every doctor visit, the number of people getting annual physicals will drop. And that nagging cough won't be treated until it IS a crisis, etc.
That's what we deal with now. The working poor serve as a pool for diseases because they can't afford care. So, new strains of diseases get a foothold and we run through epidemics instead of getting people treated.
As costs get higher, or fewer people have adequate insurance, this problem will only get worse.
Same deal with drug coverage. If people can't afford their prescriptions, they aren't as likely to finish the full course of treatment. That's how we get drug-resistant strains. Then the cost of treating that same bug in everyone else goes up because we need the latest and greatest drug instead of a generic that's been around for 20 years.
Because of all these other issues, I think the best choice is socialized medicine.
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All 4 medications total just over $1000 a month. As much as I hate having to take government help we have to have him on state medical because otherwise he would die. We have no means, especially while we are both in school, to support three growing children and ourselves and keep S in medication. Sigh. I hate insurance worries.
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