MINNEAPOLIS -- Kevin Otto has built a successful small business hauling oversized loads, but oversized insurance premiums have become much harder to handle.
"It’s consistently rising, constantly, six percent, eight percent, ten percent, 12 percent. It’s never, 'Oh your rates are going backwards.' It doesn’t happen," Otto, who runs Otto Transfer in Delano with his wife Liz.
The company hauls utility poles throughout the United States and Canada, including navigating New York City hauling massive 125-feet poles.
"It takes a special kind of driver, and a lot of help!" Otto explained.
But it doesn't take an expert to see the drag rising premiums has become for small businesses like his. He has 24 employees, including 19 truck drivers, most of whom get their coverage through work.
"When we had healthy employees and everyone was healthy, that was great for us. We could afford health insurance," Otto explained. "And now it’s getting to the point where we can’t. It’s worrisome."
Insurers are proposing rate hikes ranging from seven percent to 20 percent in the 2018 small group plan rate filing with the Minnesota Dept. of Commerce. The small group rates apply to policies sold to companies with fewer than 50 employees.
In the rate filings insurers cited the rising cost of health care, especially prescription drugs, and the fact that more people used health care than originally anticipated.
Before the price shocks that accompanied the Affordable Care Act's implementation in 2014, Otto said he was able to pay 100 percent of the premiums for both his employees and their dependents. Since the ACA kicked in he pays 100 percent for his employees, but 50 percent of their dependent's premiums.
Otto already moved from a Health Partners product to a plan offered by Medica to save on premiums, but that involved changing provider networks. And out-of-pocket costs have also risen sharply in most plans on the market -- deductibles that must be met before coverage kicks in on a variety of claims.
"We have one employee with three children. Before any health insurance pays for anything that employee, and us, will have spent $23,000 on their health care. It’s kind of staggering when you think about that time 20 employees."
At the same time, he understands the value of providing coverage to his truck drivers and support staff.
"I believe it’s important to offer coverage because it adds stability to our drivers’ lives, so they know we have their back, that we value them as employees," Otto explained.
"It’s important that they know if their family gets sick there’s a program back here that’s going to take care of them."