My Real-Life Experiences with Escalating Health Insurance Prices

Posted by on Oct 22 2009

We just got our health insurance renewal in the mail. We knew there would be a price increase…there always is.

As self-employed small business owners, my husband and I have to buy private health insurance. This year’s increase? A whopping 13 percent!

What does that mean in reality? For us, it means digging a little deeper in our pockets to come up with the increased monthly premium. Luckily, we can afford it. Many small biz owners cannot.

Let’s play this out with some real-life numbers. In six years, at the given increase rate, our health insurance premium will have doubled. Instead of $700 a month, it will be over $1,400 a month — equal to an additional house mortgage payment.

And that’s if we don’t get sick. If we get sick, it’s possible that our premiums could skyrocket.

Most mature businesses would be hard-pressed to double their revenues every 6 years in order to keep up with increasing health insurance premium costs for the owners and their employees, without radically changing their business model. For many service providers, it would mean either doubling the amount of billable hours you work each week, increasing your own prices, or cutting back on expenses elsewhere. Or dropping your health insurance coverage completely.

Yes, I could increase revenue by hiring other small business coaches to work for Passion For Business, but that’s not a business model I’m interested in persuing. So does increased insurance premiums force small business owners to either change their business model against their will or go out of business? I believe the answer is “yes” more often than we’d like.

I’m not here to argue politics or health care reform. I’m here to paint a simple picture of what massive health insurance costs are doing to people like me: self-employed small business owners.


15 comments for now

15 Responses to “My Real-Life Experiences with Escalating Health Insurance Prices”

  1. I so agree, Karyn! I face the same thing. I know that people who are not self-employed don’t really get the huge impact this issue has on self-employed families. It is one of my biggest costs of business. Last year I had to downgrade us to a 70/30 plan from a traditional 80/20 plan– LifeWise really forced my hand. The rates skyrocketed! I’m sure I was one of countless people who had to leave that “old fashioned” 80/20 plan. Grrrr!

    02 Nov 2009 at 11:40 am

  2. Karyn Greenstreet

    I hear you, Mikelann! It’s truly like paying a second mortgage, but we don’t get the extra house when we make the payments. 🙂

    12 Nov 2009 at 5:34 am

  3. Florida tops as one of the worst. Some cost effective programs are not even available in the state anymore, and to boot, they categorize by zip codes, so if you are in a Senior Citizens zip code, Bang, the premiums are out of reach, and I’ve seen companies closed their doors on account of high rising insurance premiums.

    Many self-employed businesses are simply going without it waiting for a better health care reform; if there’s ever one.

    17 Nov 2009 at 10:03 am

  4. Karyn,

    I agree! I’m currently evaluating a new health insurance plan cause my rates have gone up from $170/month to almost $400/month since I started five years ago.

    And I don’t even USE the dang insurance!

    I’m not big on politics but this is actually something that I’d personally get involved in to have a voice for change.

    Thanks for putting it out there Karyn!

    Melanie Benson Strick
    CEO Success Connections

    17 Nov 2009 at 1:40 pm

  5. Karyn Greenstreet

    Wow, that’s really tough, Ali. Do we all have to check census data before buying a new home/office, to be sure we’re not in an area where we could have higher health insurance costs?

    Yet doing without health insurance can be a huge risk as well. It seems to be a win-lose proposition…guess who is on the “win” side? 🙂

    17 Nov 2009 at 2:22 pm

  6. Karyn Greenstreet

    Holy Toledo, Melanie! That’s an incredible price increase!

    I’m not big on politics, either, but there must be a way to reduce the cost of health care. When the cost of something doubles every five or six years, bells & whistles go off in my head — from a business management perspective.

    We all flipped out when gasoline went from $2 a gallon to $4 a gallon, and drove less. But we don’t really have that same option when it comes to health care if we value wellness. Yet I hear stories all the time about people choosing between medicine and food.

    17 Nov 2009 at 2:30 pm

  7. I’m in the same boat. I changed carriers 2x in 4 yrs because of the increases, and I rarely use my insurance beyond checkups. In less than a year Aetna increased my rates 3 times for a total increase of almost 30%. I had to increase my deductible to $5K in order to cut my premiums in half.

    03 Dec 2009 at 2:40 pm

  8. Beth

    A someone who has had to file bankruptcy over many thousands of dollars in medical bills even though I had what people here consider is the best health insurance available I definitely relate to this conversation.

    Due to a bizarre accident, I have ongoing health issues. Stress makes them all worse. Alternative health care practices have helped me more than the traditional Western medicine, so I use a combination of both. I have to pay 100% out of pocket for alternative care, but feel that it is worth it since it works better for me. I have found that paying for my medicines myself is often lower than using my health insurance and paying the co-pay! I buy healthier food now, as much as organic as possible, walk every day and do deep breathing exercises, and much more. I put off going to the regular doctor for months at a time, until I feel I absolutely must. Then I negotioate, ask questions, and am honest about my finances.

    This is such a serious issue in our country today. I don’t like health insurance at all since I have had so many problems getting the companies to pay. Costs are sky-high, sometimes the tests and care are questionable in value, the medicines have side effects sometimes worse than what I was being treated for, and as I mentioned, even having one of the best insurance policies around, when trouble struck I couldn’t afford the thousands of dollars in co-pays and other related costs. I don’t know what the solution is, but my personal plan is getting healthier and practicing safety and prevention. I am also going to be starting a savings fund to use for medical once I am working again.

    03 Dec 2009 at 3:26 pm

  9. Karyn Greenstreet

    Beth, wouldn’t it be cool if someone set up an insurance company JUST to pay for alternative care? Hey…if they can have pet health insurance, why not alternative care insurance?

    04 Dec 2009 at 10:58 am

  10. Yes, these Health Insurance cost increases are incomprehensible to me. Even though my husband and I are on Medicare with additional private insurance supplement, our premiums increased by 50% out of the blue. Imagine if i were to increase my fees accordingly.

    Yet, I am healthy, no meds, eat well, am active and feeling alive and I refuse to let this get me down. Health care is important and i believe that we can cut down and/or out many life style choices if needed. Imagine living in a country where the luxury of insurance and health care does not exist. Ultimately, it’s all relative.

    My heart goes to the the millions of Americans who are not even given the option of health insurance; that is criminal.

    helga M. Matzko
    Gestalt institute Rhode island

    03 Dec 2009 at 3:43 pm

  11. Karyn Greenstreet

    Helga, our insurance agent told us that as we hit “milestone birthdays,” our rates would go up automatically. Some employers are firing older workers because it increases the rates for everyone. I always thought that the purpose of any type of insurance was to pool the risk, everyone paying the same amount and the money going to those in need. Otherwise, what’s “insurance” for? (I’m reminded of when Benjamin Franklin set up the fire insurance scheme in Philadelphia in the 1700s…that’s the model I think of, when I think of insurance.)

    04 Dec 2009 at 10:56 am

  12. This is one issue that can get me, like many others fired up. And I see it from both sides. or 3 sides.

    As a consumer, my crummy high deductible (2500) hmo went up around $50 this year…..from $344 to $395. I go to the Dr. maybe 2x a year, and have one monthly rx and 2 that I renew once, maybe twice a year. Needless to say, I haven’t met the deductible yet. This is my 3rd year with this plan.

    I also use primarily alternative healthcare: Chiropractor, supplements, accupuncture, healthy eating

    On the other side, I am a psychotherapist and addictions counselor. I am NOT in any networks, and sometimes lose clients because of that. The only network I was in was Cigna, because I worked for them from 1993-1999. When I left, they asked me to stay in network. Short story: the reimbursement is still the same $60 that it was in 1996. I finally dropped out after several requests for an increase.

    Many companies are now arbitrarily lowering their usual & customary reimbursement rates even for out-of-network providers.

    So my rant is over, except for the question: where is the money going if it’s not going to the providers?

    03 Dec 2009 at 8:00 pm

  13. Karyn Greenstreet

    That’s amazing, Jerri. Where DOES the money go? If health insurance rates are going up, but providers are not seeing a corresponding increase in the fees the insurance companies will pay for services, how can that work?

    04 Dec 2009 at 10:52 am

  14. Hi Karyn,
    I don’t usually comment on blogs, but this topic is so important to self employed business owners that I feel like expressing myself. Five years ago my high deductible health insurance plan ($5000) was $200 a month for my husband and I. This year our carrier LifeWise stopped insuring folks in Arizona so we were forced to switch to BCBS. Our premium is now $388 per month and we maintain a healthy lifestyle and never go to doctor! I hate to think what will happen when our health insurance gets close to equaling our mortgage payment. Yikes!

    16 Dec 2009 at 4:21 pm

  15. Karyn Greenstreet

    Thanks for your comments, Suzanne. I wonder why your old insurance company stopped selling policies in Arizona?


    16 Dec 2009 at 5:20 pm

Category: Business Strategy & Planning