(NECN: Peter Howe, Littleton, Mass.) - As it is for many small business owners, the cost of health insurance is a huge headache for Materials Systems Inc.'s founder and CEO, Les Bowen. He wishes the new federal health bill promised to do more about it.
"Ten percent per year increases is what my company's been experiencing over the years" in terms of rising costs for providing employee health insurance, says Bowen. The 30-person company manufactures high-tech sonar technology equipment, called piezocomposite transducers and arrays, used by the U.S. Navy, oil drillers, industrial manufacturers, and others.
As a board member of the Smaller Business Association of New England, Bowen followed this past year's health reform debate closely. "The big concern about these bills is that they don't emphasize what is most important for small businesses, which is reducing costs, because health care is becoming a huge burden on businesses nationwide of all types,'' Bowen said.
As a matter of principle and staying competitive with other top high-tech manufacturers, Bowen's been committed to making sure MSI covers 80 percent of its employees' health insurance premiums, employees 20 percent. For Bowen, it's a way to retain top manufacturing talent, and paying for solid coverage to help ensure a healthy workforce is simply smart business. In recent years, though, sticking to that 80/20 split has meant pushing a steady share of the cost increases to employees, through measures like raising co-payments for doctor's-office visits from $5 to $25. Bowen says overall premiums have doubled for MSI in recent years, and now equal 15 percent of payroll costs -- something that makes it even harder than ever for MSI to compete on cost with foreign companies operating in countries with government-run and -funded health insurance systems.
Count Bowen as a business leader who sees the recession really is ending, with customers finally ramping up orders they've been delaying or stringing out for high-tech gear. MSI recently began running overtime shifts on its manufacturing floor for the first time since 2008, Bowen said. Now the company is looking to add contract employees, and before too long, new permanent employees. But ultimately, just how many permanent full-benefit jobs MSI adds beyond the 30 it now has will, as with so many companies, turn heavily on just how much of its revenue is eaten up by the cost of health insurance.
Jim Klocke, executive vice president of the Greater Boston Chamber of Commerce, said he agrees with Bowen that the bill fell short when it came to holding down costs. "The cost-containment mechanisms that were in this bill at the beginning got either delayed or watered down pretty significantly as it went on,'' Klocke said.
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Bowen wishes there had been stronger provisions on medical-lawsuit reforms and malpractice and more efforts to squeeze costs out of the nation's fragmented insurance system.
Klocke noted in an interview with NECN's Greg Wayland that "one benefit small businesses will get is a tax credit that helps them get health insurance for lower- and middle-wage workers.'' Specifically, under the measure sent by the House to the Senate for final enactment, between now and 2013, businesses under 25 employees that have average pay per worker of under $50,000 with get tax incentives to provide health insurance.
As far as other sticks and carrots, MSI and other companies with fewer than 50 employees will be exempted from sanctions. But those with more than 50 workers will, after 2014, will face a $2,000-per-worker annual penalty if they don't offer coverage deemed "affordable" by government regulators.
Also coming in 2014 are new state-level health insurance "exchanges" offering small businesses like MSI a chance to join up in group health plan buying cooperatives.
Those, Les Bowen likes. "The opportunity really is to allow small businesses and individuals to group together to get large-group rates if they possibly can [and to] allow that to happen,'' Bowen says, but adds that the best possible bill for small businesses would "take cost out of the system wherever possible.''
