Almost one year ago today I wrote a blog piece about gap intelligence’s new experiment on health insurance. gap intelligence, like millions of other small companies across the country, kept a very close eye on expenses as the global economy came to a grinding halt.
Health insurance was one of our biggest expenses and we were challenged to find a way to reduce our overall health care costs while maintaining the same level of coverage for the team.
After deliberating for several months, most insurance brokers suggested that we adopt a new approach to health care that was growing exponentially in popularity – a Health Savings Account (or HSA for short).
In its most simplistic form, a HSA is a bank account that is really no different than a personal checking account – you receive a debit card to withdraw funds to pay medical bills and you get a monthly statement showing your balance. The HSA account is then supported by a very high deductible health insurance plan, which is in our case provided by Blue Shield of California.
Through the plan, 100% of the deductible (several thousand dollars) is paid by the employee, who uses the pre-tax funds collected in their HSA accounts.
After the deductible had been reached, 100% of every dollar thereafter would be covered by Blue Shield of California. Given that gap intelligence is a relatively young company and whose employees would presumably need minimal medical attention, the HSA plan seemed then (and to an extent is today) an ideal solution to ease our budget. Our health insurance premiums would decrease substantially, our employees could save on taxes and keep a medical fund for life, and everyone would be covered in case of a dire emergency.
This May is our annual renewal of our health insurance policy and to celebrate or first anniversary, Blue Shield of California raised our premiums by 58%.
You read that right – 58%.
A premium that cost us $100 a month in April will cost $158 in May (underline that).
Blue Shield’s reasoning behind the massive rate increase was that diabetics, who require expensive insulin medication to stay alive, quickly gobbled up their high deductibles and then enjoyed 100% coverage of every dollar thereafter.*** In other words, people were actually using their health insurance.
Though “it’s the diabetics” was the reason given for our rate increase, the underlying reasons may be do to health care reform, the astronomical costs of medicine in the US, a national shortage of doctors (and medical schools), malpractice insurance, malpractice fraud, and so on…..
With few viable options presented to us, gap intelligence is going to stick out the HSA program one more year. Blue Shield was forthright enough to warn us that its policy to cover 100% of costs after the deductible was reached will end in 2011, when it will then fall to 80%.
Between now and then, we’ll look at other health care options, either through Blue Shield or other providers (Blue Shield may cut us after this blog), but I did want to share some of the challenges of being a small business and perhaps show an example of how health care impacts us all (without getting on either side of the political fence).
For the insurance agents who are reading this blog (I know you are) and have a recommendation – please feel free to ping me directly here:
Oh, and if you know or happen to meet a diabetic – rising health insurance costs is their fault and they should be scolded.
***It should be noted that no current member of our team is diabetic and that the affliction has ZERO influence on our hiring practices.