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Thursday, Mar 28, 2024

Health Care Hikes Hit Valley Businesses Hard

Health Care Hikes Hit Valley Businesses Hard By JACQUELINE FOX Staff Reporter Not surprisingly, most Valley business owners surveyed recently about employee health benefits say the costs of their plans have gone up since the beginning of the year. Most also seem to feel there is little they can do about it. A majority of the respondents said, although they anticipate additional increases over the next year, they have no intention of switching to another provider. And, nearly half of those who participated in the survey also said their companies would absorb any future increases rather than pass those costs on to their employees. The responses seem to reflect what many experts have been hinting at for weeks now: that the economic dust from the tech wreck of 2000 and the events of Sept. 11 is beginning to clear, and companies across all sectors of the business community are moving perhaps gingerly out of cost-containment mode. Of the 47 respondents who participated in the San Fernando Valley Leadership Survey, 63 percent said they had seen increases over the last three months. Fifty percent said they expect those costs to go up by 10 percent or less over the next 12 months. But 70 percent of the respondents say they plan to remain with their current provider, compared to 15 percent of the respondents who say they intend to shop around for a better deal. Larry Cohen, CEO of Glyphix, a Woodland Hills-based marketing and advertising firm, said his company has been hit with a 12-percent increase in health care costs over the last few months, not an insignificant amount for a growing business with just 11 employees. But he said the price his company pays to keep his workers healthy and happy is worth every penny. “We expect a lot out of our employees and, as long as we can, we like to accept the responsibility of providing basic benefits, like health care,” Cohen said. Cohen said, despite the increases, he has no intention of switching to another provider because he simply doesn’t think he’s going to get a better deal. But, more importantly, it’s about the workers. “Why aren’t we switching? Well, I think we are getting an average price, first of all,” Cohen said. “But on top of that, our employees have developed very personal relationships with their doctors and we don’t want to do anything to upset that. We are just a small business trying to do our best to do right by our employees.” The survey was the second quarterly survey conducted jointly by the San Fernando Valley Business Journal and Woodland Hills-based Cooper Communications Inc. on issues affecting businesses in the Valley. Martin Cooper, president of Cooper Communications, said the fact that 41 percent of the respondents said they did not intend to pass increases on to their employees indicates many businesses are moving from retrenchment mode into a recovery phase. “I think we’ve just come through an interesting recession period where what a lot of companies have done is take the opportunity to trim fat from the bottom up,” said Cooper. “If that’s true, they are now left with what are their better employees and, if they want to retain those employees, one of the best ways to do that is to provide the fairest benefits packages you can get.” Of the respondents, 38 percent said they would pass some or all of the increased costs in their plans on to their employees and 15 percent said they intended to reduce their packages to save money. Cooper also said he believes the reason so many respondents said they didn’t intend to make changes to their plans has more to do with inertia than loyalty to their providers. “I think that unfortunately, or sadly, too many employers don’t focus enough on various kinds of insurance or don’t shop around enough,” Cooper said. “Most people don’t question the bill, they just pay it rather than hire someone to call up three different plans and compare products. They just consider it the cost of doing business.” Health care costs have been increasing for the last several years and there is scant promise of them leveling off anytime soon. Of the respondents, 57 percent said they believed the increases are primarily due to a desire on the part of the provider to boost profits. But 38 percent support what many providers have been saying in their defense: that they are simply having to respond to increases on their end, particularly hikes in the cost of prescription drugs and the costs needed to cover technological advances in care. “I don’t think that we are shocked to learn that most business owners would feel that way,” said Lisa Haines, spokeswoman for Welpoint Health Network in Thousand Oaks. “It’s medical costs that are increasing and we are challenged to keep up with those changes. Prescription drug costs have gone up by about 13 percent in the last year and we have an aging population and increases that accompany new medical technology. So we have to be able to provide a product that’s viable for us, but also for the consumer.” CHARTS: How have your health care costs changed over the last three months? Remained stable: 28 percent Increased: 63 percent Decreased: 3 percent How are you addressing the increases? Absorb the costs: 41 percent Pass some or all increases on to employees: 38 percent Reduce or eliminate packages: 15 percent Do you plan to stay with your current health care provider? Remain: 70 percent Find a new provider: 15 percent Don’t know or other: 6 percent

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