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October 25, 2014

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Health care quarterly:

Health costs burden business

When Michael MacQuarrie lost his home-inspection job with a builder, he lost his health insurance, and after his COBRA coverage ran out he sought insurance on the open market. Because of his medical history, he was denied.

Determined to get coverage for himself and his family, MacQuarrie decided to go into business for himself, thinking that as a business owner he would get the coverage he needed. Again, he was denied because of both his and his wife’s health.

Family medical emergencies have racked up $150,000 in bills.

“No matter which way I turned, I could not get insurance,” he said. “It’s devastating me financially.”

MacQuarrie said he is pleased the House passed its health care reform bill and hopes it will help him get coverage when insurance companies can no longer turn people away because of preexisting conditions.

Rep. Dina Titus, D-Nev., hosted a round table Nov. 12 with three small-business owners to discuss the bill, which she voted for.

The House bill requires businesses with yearly payrolls of more than $500,000 to provide health insurance or face a tax penalty, according to a memo from the House’s Ways and Means, Energy and Commerce, and Education and Labor committees.

Currently, the House bill says after reform measures go into effect businesses would have five years to offer health insurance or face at least a 2 percent payroll penalty.

The memo calls the mandate a “shared responsibility” among employers, individuals and the government.

The House bill mandates that small businesses with annual payrolls of less than $750,000, but more than $500,000, would have to pay a 2 percent penalty based on its payroll if they don’t offer health insurance to employees.

The smallest of companies, or those with less than $500,000 in annual payroll, would be exempt from offering health insurance, and their workers would have access to a health insurance exchange that would include private insurance companies and a public option.

The larger companies, those with at least $750,000 in annual payroll, would be required to offer health insurance and pay for at least 72.5 percent of the insurance’s premiums for full-time employees, and at least 65 percent for workers with families covered by their policies.

If the company elects not to offer health insurance, it would have to pay an 8 percent penalty based on its payroll.

Health insurance costs are expected to grow by 9 percent in 2010, according to a PricewaterhouseCoopers study. Although more than the rate of inflation and worker wage increases, the costs are growing slower than in previous years, the study said.

A study by the Kaiser Family Foundation said that since 2000, health insurance premiums have increased 5 percent to 14 percent, while inflation has increased just 2 percent to 4 percent during that time.

“I think (health care reform) is good for businesses,” Titus said. “This will help slow down those increases.”

Titus was greeted at her Las Vegas office by two dozen proponents of reform who thanked her for voting for the bill. Three people protested the bill’s passage.

After a health emergency, MacQuarrie was prescribed 14 medications. Because he hasn’t seen a doctor in nine months, he has no idea if the medications are helping or harming him.

MacQuarrie can’t afford a $450 visit to a specialist when he owes $150,000. It will take another emergency for him to get treatment.

State law requires employers to pay 25 percent of their workers’ health insurance premiums, but generally those that do offer insurance are paying 50 percent, said Larry Harrison, a Las Vegas-based insurance broker and spokesman for the National Association of Health Underwriters.

Harrison said he thinks the insurance mandate will cause layoffs at companies that want to avoid offering insurance or paying penalties.

“(The bill) is going to have a direct impact on employment and that’s the problem,” he said. “It’s (also) going to drive up costs of their products and services they are offering.”

Health insurer WellPoint said its study found insurance premiums will go up about 70 percent for small businesses after health care reform is enacted.

For example, a business with eight employees with average health needs would see its monthly premiums increase 16 percent, from $312 to $363. This doesn’t take into account tax credits that small businesses may be eligible for.

Jay Rosen of Rosen & Co. West, a real estate brokerage with 30 agents says because agents are considered independent contractors, he provides insurance only for him and his wife. But he said he has several agents earning wages below the poverty level who can’t afford health insurance.

“I know that because I pay them,” he said.

The insurance he signed up for is through the Las Vegas Chamber of Commerce.

Chamber spokeswoman Cara Roberts said that of the 6,500 chamber members, 3,000 are covered, insuring 15,000 employees.

The chamber supports health care reform, but only if it doesn’t place the onus on small businesses, she said.

“It’s the wrong approach,” she said. “It doesn’t address what the primary causes (of increasingly high health costs) are.”

Health care reform should encourage competition and reform medical tort laws to decrease doctors’ liability, she said.

“The goal, it seems, is to bring down the cost of health insurance to make it more affordable,” she said. “But we (as a whole) don’t know if that’s going to happen.”

As a chamber member, Rosen said he received a form letter opposing health care reform from the chamber for him to sign and send to his representatives. He said he rewrote the letter as one supporting it.

“I just don’t understand the opposition to this, based on reality,” Rosen said.

As a business owner, he said he supports legislation that he thinks will make health insurance more affordable and accessible for the business community. Health insurance is his company’s largest expense, he said.

“My biggest concern is not getting it, but keeping it,” Rosen said.

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