[2014 State of the Industry Report] Health Care & Benefits

Features - Cover Story

PMPs are taking a “wait and see” approach to see what happens to costs — and to their customers’ wallets.

January 28, 2014
Anne Nagro

One thing’s certain when it comes to health care: uncertainty. As the Affordable Care Act continues to change shape, many business owners across the country are unsure how new taxes and regulations will impact health care costs, profits and hiring. They say health care is one of the factors having the greatest impact on business decisions.

Travis Swope, president of Griffin Pest Management in Santa Ana, Calif., said a number of potential acquisitions he looked at wanted to “fast track a deal before the end of the year to stave off rising health care premiums.” One company promised to pay employees’ health care but confided this was impossible without selling the business; Swope couldn’t absorb the cost for the additional employees and the deal fell through, he explained. This may “slow the pace at which we can grow, specifically with regards to purchasing another company that may already offer a group health plan to their employees,” he said.

Although only 7 percent of PMPs cited health care cost as their single greatest business challenge, costs are increasing. According to a 2013 survey by the National Federation of Independent Business, 64 percent of small-business owners paid more for insurance premiums per employee in 2013 than in 2012.

Bug Doctor Termite & Pest Control’s health insurance cost was up 8 percent 2013, not as bad as in previous years, said Aust, who didn’t pass on the increase to employees.

Employees are just as confused and unprepared financially for impending changes. Deductibles and the amounts employees pay for health care premiums are expected to increase; most don’t understand their roles in actively managed or consumer-driven health plans. As premiums increase, consumers may cut back on goods and services, including pest control, warned Chuck Russell, president of Eradico Services in Novi, Mich.

Most PMPs are taking a wait-and-see approach: Nearly 66 percent reported not doing anything to deal with increased health-care costs. Almost one-third were postponing major purchases or reducing non-essential benefits. Twelve percent were reducing or eliminating pay raises and bonuses.