December 8, 2022

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Health insurance price hikes could have a huge impact on Vermont small businesses

Lake Champlain Chocolates in its 15,000-square-foot space in Williston in November 2019. File photo by Mike Dougherty/VTDigger

Kevin Cheney’s events and crowd-control company is beginning to rebound from what has been a lean couple of years. 

Cheney, founder and majority owner of Green Mountain Concert Services Inc., recalls losing a quarter of a million dollars on the first day of the Covid-19 lockdown two years ago when everything from football games to festivals was canceled. 

Things are different this spring. Festivals, concerts and in-person games are coming back, and the Williston company is once again getting its footing.

But a decision from state regulators later this week could undo some of that hard-earned recovery. Vermont’s three largest hospitals have asked the Green Mountain Care Board to raise service charges for private insurance companies — and thus the people covered by their health care policies. If the care board agrees, Cheney’s company and others like it would pay the price.

“We don’t have a choice,” Cheney said. “We have to give people health insurance.”

The big three — The University of Vermont Medical Center in Burlington, Central Vermont Medical Center in Berlin and Rutland Regional Medical Center — say the higher charges would cover a projected $51 million deficit in the current fiscal year, which ends Sept. 30. The University of Vermont Health Network asked for a 10% increase in charges for its Burlington and Berlin hospitals. Rutland Regional asked for a 9% increase.

That’s bad news for the roughly 329,000 Vermonters who carry private insurance, many of whom get coverage through their employers. Cheney and several other employers communicated their discontent to the Green Mountain Care Board in a rash of letters ahead of Wednesday’s rate adjustment hearings. 

“There’s no escaping the pain,” said Betsy Bishop, president of the Vermont Chamber of Commerce. “We know that it’s coming, and it’s a very difficult balancing act.”

When health insurance costs rise, employers can absorb that cost or pass it on to employees in the form of higher premiums. But in a year full of soaring costs and a volatile labor market, the prospect of higher premiums puts employers in a tough spot, said John Baumann, vice president and chief financial officer of the engineering firm DuBois and King Inc. in Randolph. 

Employees have choices when it comes to where to work nowadays, and they could easily jump ship for better pay and benefits. 

“The private sector is really between a rock and a hard place when it comes to health care,” Baumann said. “And we just keep getting more and more exorbitant costs passed on to us.”

Ballooning health care costs have been an issue for employers for decades, but the pandemic made it worse. A new analysis from the U.S. Centers for Medicare and Medicaid Services reveals that health care spending surged almost 10% nationwide in 2020. Spending is likely to continue to grow for the rest of the decade, even if coronavirus recedes, federal actuaries said. 

That’s bad news for DuBois and King, a self-insured company. Rather than paying an insurance company a monthly premium per employee, self-insured companies pay for every health checkup, prescription medication and X-ray. So when hospitals raise their prices midyear, DuBois and King must pay more out of pocket right away. 

“From my perspective, if the (care) board does this, how am I going to rely on any rates they establish going forward, when we go to renew and negotiate our health insurances every year going forward, if we know that the board and the providers can just willy-nilly change their rates midstream?” Baumann asked.

Companies that pay a premium, or flat fee per employee, are not off the hook either, but they get a reprieve until their annual contract with insurers expires next year. 

“I’ve got employees that are beside themselves just with the health care cost increases this year,” Baumann said. “And I feel for them, too, because it’s significant.”

Mary Wylde, director of people and culture at Lake Champlain Chocolates, agrees. On the other hand, every dollar that goes to health care is a dollar the Burlington chocolatier is unable to spend on other business priorities.

“I know eventually we will have increases,” she said. “That’s just part of business, and we’re OK with that. We’re definitely wanting to pay our fair share. I’ve just never had an experience where something was changed midstream.”

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Filed under:

Health Care

Tags: Betsy Bishop, Central Vermont Medical Center, DuBois and King Inc., Green Mountain Concert Services Inc., health care, health insurance, health insurance rates, John Baumann, Kevin Cheney, Lake Champlain Chocolates, Mary Wylde, Rutland Regional Medical Center, University of Vermont Medical Center, Vermont businesses, Vermont Chamber of Commerce, Vermont hospitals

Liora Engel-Smith

About Liora

Liora Engel-Smith covers health care for VTDigger. She previously covered rural health at NC Health News in North Carolina and the Keene Sentinel in New Hampshire. She also had been at the Muscatine Journal in rural Iowa. Engel-Smith has master’s degrees in public health from Drexel University and journalism from Temple University. Before moving to journalism, she was a scientist who briefly worked in the pharmaceutical industry.