The High Cost of Health Insurance.

• Author: MYERS, DEBORAH J.
• Position: For Alaskan businesses

It's becoming increasingly expensive for small businesses in Alaska to provide health insurance benefits to employees.

Offering good health insurance benefits is one of the best ways companies can ensure their employees' loyalty. Gretchen Boone, director of Gold Creek Child Development Center in Juneau, said that's the reason she offers health insurance.

"We can keep employees longer by offering health benefits," she said. "In child care, it's unusual to get (benefits)."

Unfortunately for many small businesses, health insurance is difficult to afford and employees oftentimes cannot buy insurance on their own; however, this doesn't mean that there are no options. By understanding the health insurance problem, exploring the types of insurance available, finding out what their employees want, and selecting an option within their benefits budget, even small employers may find a way to offer health coverage to their employees.

"Usually, the impact on the budget is (the employer's) biggest complaint," said Jim Dunlap, owner of the Fairbanks-based Dunlap Agency, an insurance brokerage firm.

Since insurance providers require employers to pay a minimum of 50 percent of the premium, they feel the pinch of high rates just as much as their employees do. Some plans have gone up 50 percent or more annually, in part due to the high cost of medical care in Alaska.

"Claims are 15 percent to 20 percent higher (in Alaska compared to other states) because (medical) costs are higher," said Jeff Davis, executive director of Blue Cross/Blue Shield of Alaska.

A Growing Exodus

Apparently the insurance companies haven't been listening to complaints of rising insurance premiums; they've been leaving Alaska.

"We used to have quite a few companies selling (insurance) here," said Roberta Goughnour, owner of 3R Consultants LLC, a human resources consulting company in Anchorage, "but now, there are a very limited number of insurers offering (employee health benefits)."

Alaska's large number of small businesses is one reason why, according to Nalani Kala'I, medical benefit manager for Hagen Insurance Inc. in Anchorage. "Alaska is built on small businesses," she said, "and that's not what (insurance companies) want."

Janita Lunsford, owner of Superior Machine & Welding in Anchorage, said that she has problems getting enough of the employees at her shop to sign up for health insurance due to the high cost. "Insurance companies seem to like really large groups," she added.

Goughnour of 3R Consultants agrees. "The issue is population," she said. "The make-up of the market--small businesses--drives rates up. There's also a lack of competitiveness."

Davis, of Blue Cross/Blue Shield, takes a more corporate approach to explaining the turnover of health insurance companies and the high expense.

"There's a continuous pattern of carriers...