Small Business & Staggering Health Care Costs

I’ve got serious health care fatigue. The issue is no longer about affordable quality health care. The issue has become the health care legislation process. What a shame. After all of that positive momentum following the massive change that swept through Washington in January 2009, we are back to gridlock. The democratic process is clearly showing its weaknesses as our political leaders bicker over tactics.

Forget the larger debate. Look at one example. My example. February was an ugly month for Horst Engineering. Our health insurance renewal process concluded when our new plan year started on 3/1/2010, this past Monday. As the CEO of this small business, I went through utter hell in the months leading up to the decisions about this important benefit. How do you budget for health care when you can’t predict where the costs are going? How do you communicate to your colleagues that the decisions are all reactive and simply out of your control. Fortunately, I wasn’t alone. Our Controller and our long-suffering “insurance agents” were integral in the process. We stressed about it together.

The cost of health care is out of control. Duh, how revolutionary is that statement? We just had the worst renewal in our 64 year history. In Connecticut, the costs are high. The mandates are tough. The competition is non-existent. Over the years, we have changed carriers many times. Our employees have suffered along with their company as they have been asked to share part of the burden. The plans are nearly impossible to understand. The fees and rules are nit-picky. The co-pays and deductibles are rising. The whole system is broken. Who is winning this game?

There is no question that the cost of health care, at least in this state, is a huge disincentive to grow your business. When you cannot pass on costs to your customers, even when they are legitimate and out of your control, then you simply watch as margin erodes. Our products cannot support the current health care costs, never mind the five-year projection. If it is ugly now, just wait. Growing your way out of the problem is not a solution. When health care premiums go up at 20% plus per year, you better have a damn fast growing business if you are going to outgrow that runaway train. What about efficiencies, you ask? Duh, of course. Much of the US Manufacturing community has adopted lean enterprise and the “best” aspects of the vaunted Toyota Production System. If you are competing today, you are looking at all of your efficiencies. Still, why should you have to work so hard, cutting costs everywhere else, just to overcome a massive cost that simply goes up every year.

How about health and wellness? Well, I lead a healthy life. Follow my example. Most people don’t. Sure, we encourage employees to quit smoking, eat well, exercise, sleep, reduces stress, etc. We are working on formal programs to support all of these. We have already hosted screenings, offered flu shots, clinics, etc. I’m not sure that they all want to be vegans like me, but we can try to convince them to eat less animal products. Still, that isn’t the issue. Who cares about the cost drivers? There are many. From medical device makers, to drug companies, to insurance companies, to health care for retirees, to Medicare, to tort reform…add whatever you want to the list. There are so many issues that so few understand.

Back to the point: small and mid-sized businesses provide most of the insurance coverage in this country. In the current debate, I have heard almost nothing about this. Nor have I heard how we are going to change the system so that the costs can be controlled. We hear lots about covering the uninsured. A noble idea, but one that won’t lower costs. Sure, we hear lots about the legislative process. More rhetoric.

The employees of Horst Engineering and I are still waiting for a real solution. In the meantime, we are going to go back and work hard at our business like we always do.

5 Responses to “Small Business & Staggering Health Care Costs”


  1. 1 vishcanaran 19 March 2010 at 1:07 pm

    I could not have said this better than you did. It is time small business mobilize. We are getting squeezed by both government and big business, yet as you point out it is our money that moves this country. Time to think lean and get involved. Being small and numerous means we are not properly represented at any level of government. It is easy to put all the costs on the one that lobbies and complains the least.

    Canada has an attractive R&D tax credit. AMAT is moving manufacturing outside of the country, even with all our rhetoric about green jobs. Maybe it is time we learn from others. Business standardization will make us more competitive.

    Okay back to growing the business, it is what we know how to do.

    Thank you for this post. More people just need to respond to this post and it will stay at the forefront of the google search “healthcare costs for business”.


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