Health insurance burden on business owners

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(Host) Commentator Timothy McQuiston says that Govenror Jim Douglas could please the business community by fixing Vermont’s health insurance problems.

(McQuiston) I’m journalist and a business owner, which makes me a curmudgeon and a complainer. Both of these otherwise unattractive personal characteristics are professionally useful. Journalists frequently have to be a pain in the neck to do their jobs. And in business, the squeaky wheel usually gets the grease.

It’s Governor Jim Douglas who holds the grease gun now. He has most of his top administrative posts filled. And he’s vowed to make Vermont more business friendly. Whatever that means.

A lot of the Vermont businessperson’s angst has to do with permit reform. Others complain about income and sales and property taxes. My chief complaint is the cost of health insurance. I pay about $325 a month for my share of my personal health insurance. For my business, I pay about 10 times that. It’s a small business with a dozen employees. Health insurance is a huge chunk of change.

Governor Douglas has a year and a half to get something done about health insurance. One way to attack the problem would be to re-write part of the small group health insurance law. As it stands now, if you’re an insurance company and you want to cover any small business in Vermont, you have to offer the same plan at the same cost to every business. This is called “community rating.”

More than a decade ago, the Legislature wanted to get rid of the practice of “cherry picking” by health insurers. In essence, the insurers didn’t want to cover anyone who was sick, or who had a high likelihood of getting sick. Anyone can see the problem with that. Back then, if you were sick, or fit into a certain high-risk demographic, you either weren’t insured or had to pay very high premiums. But when the Legislature got rid of cherry picking, the small state of Vermont became a place that was no longer a profitable business location for a lot of insurers. So a lot of them left.

The problem for Vermont is that because we’re such a small state, insurers don’t feel compelled to do business here. California and New York are too big to ignore, whether they like the laws or not. They can afford to ignore Vermont. Vermont businesses, therefore, can’t do much shopping around for rates.

One possible solution to ease the ever-escalating health insurance rates is to allow for some competitive rating. As in life insurance, non-smokers, for instance, could catch a break in their premiums.

Douglas and the Legislature would have to go down this path very carefully. Returning to the days of insuring only healthy people is not an option. But if Governor Douglas doesn’t get something significant done to reduce the cost of health insurance, he’s going to hear a lot more complaining from the business community.

This is Timothy McQuiston.

Timothy McQuiston is editor of Vermont Business Magazine.

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