Help in Lowering Health Insurance Costs.

• Author: PARMELEE, CATHERINE

Does providing health insurance to your small business have you down due to rising costs? There's help.

The drastic rise in insurance premiums can be a major pain in the pocketbook for employers who want to retain high-caliber employees by offering a quality benefits package while remaining competitive in the marketplace. And for the small business owner, the price elevation can be an enormous pill to swallow.

"Insurance costs are going up every year," said Bill Corbus, president of Alaska Electric Light and Power Co. In Juneau. "We recognize the importance of good medical insurance, but we have to do all we can to keep costs under control."

AEL&P employs around 50 people, the average size for a small business. Legislation mandates insurance carriers define small groups as those with two to 99 people. The trends that influence small businesses affect all businesses, but it can be harder for smaller companies to pay for medical coverage, pointed out Kent Davis, president of Risk and Benefit Management Services in Anchorage.

"After payroll and taxes, health insurance is probably one of the largest expenses employers are expected to pay," said Wally Cathcart of Cathcart Ltd. in Anchorage. "And I expect to see a 15 percent to 20 percent increase in premiums, with prescription drugs leading the way."

New Techniques, More Treatment

Prescription drugs and increased use of service are the two largest cost drivers in health insurance premiums, according to Jeff Davis, executive director of Blue Cross Blue Shield of Alaska. New drugs debut at higher rate than a few years ago, and in the meantime, new uses for preexisting drugs are discovered. A greater demand for prescription drugs is accelerated by increased public awareness--the result of increased marketing and promotion. And as Kent Davis noted, it takes money to advertise.

The push for prescription drugs is closely followed by new medical procedures and technologies that ultimately pump up health insurance premiums. The pace of progress is advancing, and we are on the brink of a golden age in lifesaving medical breakthroughs as researchers combine conceptual, pharmacological and technological discoveries to gain the advantage in the age-old combat against disease.

"These things generally come with a price tag," said Mark Norum, broker with Kelley Insurance Associates in Fairbanks.

Jeff Davis added that there's a pent-up demand for those services not previously available. He believes the impact...