Rein in Health Insurance Rates

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Entrepreneurs who provide health insurance to their workers faced soaring premiums last year. Small-business owners with less than 10 employees paid 9.2% more for group health insurance in 1999, compared with an average of 4.8% for all businesses, according to a survey by the Kaiser Family Foundation and the Health Research and Educational Trust. This was the biggest annual increase since 1994.

Some entrepreneurs cope with rising costs by offering alternatives to their employees. Kim King, president of King Security Services Inc. in San Francisco (1999 sales: $5 million), gives all of her 230 full-time workers a choice: Either accept a "health-plan allowance" of 35 cents/hour and get your own insurance, or join the company's group HMO plan. She reports that 90% take the allowance.

"They're able to get insurance from their spouse's plan or some other source," she says. "When we set up the allowance five years ago, it equaled what we were paying for health insurance for each employee. Now we pay much more for insurance for those who want it."

Costs are expected to increase as state legislatures continue to require health plans to include certain coverage. For example, some states may begin mandating that insurers provide alternative health-care benefits, as many states do now for chiropractic care.

Writer: Morey Stettner

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