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To insure, or not?

For nearly 25 years, Geppetto's in Ashland was a rare — example of a restaurant that provided health insurance for its employees.

But owner Ron Roth was forced to cut the benefit after — years of insurance-premium increases.

"We were for many, many years one of the few restaurants — that did have a health insurance plan," he said. "But it cost more and — more. At first, we were able to pay for most of it. Then the employees — had to pay more and more. Two years ago, we had to give it up."

Sharp annual increases in health insurance premiums are — preventing many businesses from offering health insurance benefits and — causing other companies to drop coverage or raise employee contributions.

Health insurance premiums rose 10.9 percent in 2001, 12.9 — percent in 2002 and 13.9 percent in 2003, according to the 2003 Annual — Employer Health Benefits Survey by the Kaiser Family Foundation and the — Health Research & Educational Trust.

Small businesses, with three to 199 employees, saw an — even steeper spike of 15.5 percent in 2003, while larger companies saw — a 13.2 percent increase, the survey reported.

With its plethora of small businesses, Ashland is being — hard hit by the jumps.

An all-too-common problem

Two decades ago, Roth said he could buy health insurance — for a worker for $50 to $60 a month. Adjusted for inflation, that range — would be $95 to $114 today.

But today, monthly premiums for one worker average $234 — in Oregon and $241 in the United States. Family coverage averages $596 — per month in the state and $626 nationwide, according to the Kaiser survey. —

Premium increases in 2003 outpaced both inflation and — the — percent growth rate for workers' earnings, the survey found.

After dropping group coverage, Roth and his wife themselves — went without health insurance for a year and a half before finding an — individual plan made affordable by a high deductible. The couple try to — help employees by paying a portion of the cost of visiting a nurse practitioner, — he said.

Graham Lewis, a member of the Ashland Chamber of Commerce — Health Committee, said many local businesses are unable to offer health — insurance.

"What happens in Ashland is we have mostly small businesses. — The U.S. Department of Labor counts a business with 500 employees or less — as a small business. A company with 500 employees would be a big business — in Jackson County. Businesses that would like to provide health care benefits — can't afford to do so," Lewis said. "That makes it difficult for employees — to stay here and raise families in Ashland."

A decline in the number of businesses providing health — insurance is the main contributing factor for the rising number of uninsured — Americans, the Census Bureau reported in late 2003.

The number of people without health insurance increased — by 2.4 million to 43.6 million nationwide, or 15.2 percent of the population, — according to the bureau.

Of those employed, workers at small companies were least — likely to have coverage.

Only 30.8 percent of workers at companies with fewer than — 25 employees had insurance in their own names, while 68.7 percent of workers — at companies with more than 1,000 employees had such insurance, according — to the bureau.

The Ashland Chamber of Commerce has been working for years — for legal reforms that would allow small businesses to form pools and — buy insurance at less expensive rates. Members will take up the issue — again in 2005 when the Oregon Legislature reconvenes, Lewis said.

Meanwhile, the businesses that do offer health insurance — continue their annual ritual of hunting among carriers for the plan that — still offers important benefits but has the lowest price increase.

But once again, small businesses appear to be suffering — from a lack of clout and limited choices.

In 2003, 62 percent of businesses with fewer than 200 — employees went shopping for a new plan, but just 33 percent changed their — insurance carrier or health plan type.

In contrast, 43 percent of large firms, with 1,000 to — 4,999 employees, shopped for a new plan, and 42 percent switched carriers — or plan types, according to the Kaiser survey.

Government feels pinch

If the experience of the City of Ashland is any indication, — small-business pools may not offer a silver bullet when it comes to controlling — health insurance price increases.

"We've been hit really hard and we're part of a pool of — cities and counties," said Tina Gray, City of Ashland human resources — manager. "Ashland is better than the pool on average, and our rate increase — is still huge."

Rates for one employee rose from $294 per month in 2002 — to $366 per month in 2003. Family coverage jumped from $845 per month — to $1,043, and rates are expected to increase this year as well, she said.

"We've been told to plan for a 20-percent increase, although — it may be less than that," Gray said.

Because of sound management, the city government so far — has not faced lay-offs and program cuts that other jurisdictions have — experienced. But rising health insurance premiums and Public Employee — Retirement System obligations are having impacts, she said.

"That, combined with PERS, is making it so you can't hire — anybody," Gray said.

To help control costs, the city is instituting a 5 percent — employee cost share as it negotiates new contracts with various employees — and their unions. The city also has a wellness plan that offsets gym membership — fees and the cost of routine exams for workers, provides reimbursement — for programs to quit smoking, covers well-baby care and offers on-site — cholesterol screens, according to Gray.

"The wave of the future is to concentrate on keeping employees — well," she said.

Fighting back

The Oregon Shakespeare Festival and the twin manufacturing — firms Darex Corporation and Professional Tool Manufacturing in Ashland — have taken the wellness philosophy to a whole new level.

Darex and Pro Tool had been absorbing double-digit health — insurance premium increases for several years, but hadn't asked employees — to pay more or let those jumps affect salary and wage decisions, according — to owner Dave Bernard.

Employees instead had been seeing the effects in the companies' — profit-sharing plans as the increases impact the bottom line, he said.

To fight rising costs, the companies recently launched — a wellness program that includes walking groups, exercise classes, gym — memberships, nutrition and exercise advice, weight loss plans, stop smoking — programs and other benefits, according to Bernard.

Employees have a direct financial stake in the outcome. — If the companies control costs, workers will receive half of the savings, — he said.

"If we save money, we're going to give a rebate to employees — at the end of the year," Bernard said.

The Oregon Shakespeare Festival has a longer track record — with the wellness model.

In 2001, the festival skipped the insurance company middleman — and began self-insuring its employees.

It sets aside $300 each month for eligible employees to — cover medical, dental, vision and prescription costs. The nonprofit does — have back-up catastrophic insurance in case major illnesses or injuries — push costs above a certain threshold, according to Human Resources Associate — Mary Bagshaw.

"We've been able to maintain rates for the past two years. — We haven't seen the horrible jumps other companies have," she said. "We're — pretty cognizant of the fact that we are the insurance company. keeping — well and using plans judiciously, we're able to control costs."

The festival offers regular Yoga and Yoga Ball classes, — and has set aside space where employees can do weight training.

"The convenience of it being on campus is good because — everybody's schedules are so crazy. They're able to stop in at noon and — do Yoga Ball for an hour and go back to work," Bagshaw said. "It really — has a positive impact on people."

The roughly 50 participants in on-site Weight Watchers — meetings have lost a total of 1,300 pounds in the last two years, and — several employees have gone through a smoking cessation program, she said.

Four massage therapists also visit the festival, and while — employees pay for a massage, the service provides a convenient way to — reduce stress and tension, she said.

The self-insurance model could be difficult for small — businesses to adopt because they might not be able to set aside enough — money in a reserve to cover medical expenses. Bagshaw said.

Self-insurance also can be a gamble for small businesses — that lack enough employees to spread the risk, according to industry experts.

But Bagshaw said all companies can help control rising — insurance costs by promoting healthy lifestyle changes.

"Wellness is the answer," she said.