Small Firms Face Health Insurance Price Increases

Just
as the tough economy is starting to really put the squeeze on small
businesses, they are facing another financial pinch: Jumps in their
health insurance premiums.

Though the cost of health insurance has been a long-running problem
for small businesses, their rates had been rising at a slower pace in
recent years. No more, the WSJ reports.
Employers and insurance brokers in the South, Midwest and California
are reporting noticeably steep hikes. Some premium increases being
quoted to employers are double those of just a few months ago.

One factor is the beating that investment portfolios of
not-for-profit Blue Cross and Blue Shield plans are seeing lately. In
recent years, these plans have been under political pressure to provide
price breaks. “Now that investment income is significantly less, we
could see less concern about an embarrassment of riches and more about
battening down the hatches,” says Goldman Sachs analyst Matthew Borsch.
Meantime, for-profit insurers have had higher-than-expected medical
costs and pricing missteps this year, leading them now to be less
flexible with smaller clients.

Topics: Health Insurance |

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