Small business owners concerned with insurance rates

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Posted 7:35AM on Monday, April 29, 2002

DETROIT - Rising insurance costs present a serious dilemma for many Michigan companies, one that a new survey suggests threatens to close some smaller businesses. The survey of 304 Small Business Association of Michigan members found that their health insurance premiums have doubled over the past four years, Booth News Service reported Sunday. That has forced small businesses to take a variety of actions, ranging from raising employee contributions to health care premiums to eliminating health insurance for their workers. "The survey is dramatic proof that this crisis -- the doubling of small group health insurance premiums for the past four years -- is not only devastating the small business economy but also taking a serious financial toll on employees," said Gary Woodbury, association president. According to the survey, 24 percent said surging health care costs threaten their ability to stay in business. One-third said they have either cut employee wages or limited pay increases, while 29 percent said they have limited hiring. Forty percent of business owners said they've raised prices to offset rising health care costs. Low employee morale and job dissatisfaction related to health insurance costs were reported by 28 percent of those surveyed. Bob Pierce, chief executive of the Michigan Association of Insurance Agents, acknowledges that fast-rising health insurance costs present a serious dilemma for many businesses in the state. "I think everyone has identified there's a problem," said Pierce, whose association represents 1,150 insurance agencies. "Certainly, SBAM's survey confirms that." Woodbury said the situation could get worse. He said small business owners are seeing health insurance premiums rise by as much as 25 percent this year. Conducted April 8-12 by the Lansing-based polling company EPIC/MRA, the poll included association members with 100 or fewer employees. It has a margin of error of plus or minus 5.7 percentage points. ------ On the Net: Michigan Association of Insurance Agents, http://www.michagent.org Small Business Association of Michigan, http://www.sbam.org