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4 Tri-County Business Journal • July/August 2011 EDITORIAL


Insurance hikes dramatic to many businesses


C


an you hear the wailing and gnash- ing of teeth in corner offices across the tri-county area? It’s most likely


in reaction to this year’s health insurance premium renewals. Renewal rates are coming in much higher


than any other year in recent memory for most, if not all, businesses. If your business’ policy year hasn’t reached renewal time yet, you’re in for a huge shock. For business owners who have renewed


their health insurance policies and managed to pull themselves off the floor, they’re left wondering how it could have turned this bad this quick. The parent company of the Tri-County Business Journal, for example, was hit with a 30 percent rate increase upon renewal in July. It’s broker, who went far and wide into the market to get quotes, came back with increases as much as 70 percent and reports that all of his clients are seeing a minimum of a 15 percent increase at renewal time. A survey released early this year by ERC


reports that, on average, Northeast Ohio employers’ health insurance premiums rose 15.2 percent in 2010. It’s safe to say that when ERC does its survey for 2011, the average increase will be much higher. What is to blame for these huge increas-


es? There’s no doubt that part of it is due to the Obama federal health care law passed in 2010. Even if costs haven’t gone up yet for insurance providers, they’re hedging their bets that costs will go up due to the new law and are hitting employers and employees now in anticipation. While a report late last year indicated that


most Ohioans would face higher health in- surance premiums starting in January, with hikes ranging from 8 percent to 18 percent, industry and regulatory authorities say the Patient Protection and Affordable Care Act bears only part of the blame in most cases. Doug Anderson, chief policy officer for the Ohio Department of Insurance, said the other part of it is medical inflation and the continuing trend of rising health care costs. That’s exactly the problem. The federal


government tried, and failed, to deal with rising health care costs and only made it worse. Instead, if Washington is going to insist on getting involved, it should have focused on rising costs and a broken system. At least we can take some consolation in


the Affordable Care Act of 2010 that gives businesses a partial tax credit on paid premi- ums, so long as your business qualifies.


July/August 2011 • Volume 21, Issue 6 TRI COUNTY


Web site: TriCountyBusinessJournal.com Publisher and Editor:


Todd Nighswonger, editor@lakebusinessjournal.com Contributing Editors:


Pete Strozniak, Dale Stefancic Contributing Writers:


Kay Bryson, Maria Shine Stewart


Contributing Photographers: Peter Simon


Advertising Sales:


Gina DiFrancesco, 440-510-2000, ext. 207, gdifrancesco@tntpublications.com


Ad Production Coordinator: Sherry Lundberg Designer: Stephanie Park


Opinion ON BUSINESS MATTERS SOUND OFF


WE WANT TO HEAR FROM YOU! Send us your thoughts regarding this issue, today’s economy or any other topic affecting the tri-county business community. Now’s your chance to participate and be heard on the local business front. Send your letters to the editor or your inquiries for guest columns to Editor Todd Nighswonger at editor@lakebusinessjournal.com.


Manufacturers pull together A


CEO of a mid-size manufacturing com- pany once told me he feared the notion that


he had to be the smartest guy in the plant. “If that’s the case,” he said.


“We’re all in trouble.” Nevertheless, this CEO was


Peter Strozniak


smart enough to understand that his talents, skills and leadership would not be enough to maximize the plant’s productivity to achieve the company’s national expansion plans. He turned to his employees and formed cross-functional teams, which resolved specific production problems and helped the company meet its growth goals. “I truly believe I’d rather have 10 smart


people tackle a problem,’’ he said. “I could care less about who comes up with the solution.” This CEO’s story came to mind when


I met the founding members of the Lake County Manufacturing Roundtable, an informal grassroots business organization that holds monthly forums in Mentor where local manufacturers share their knowledge, ideas and best practices. The founding members – Jeff Bill, Bob Cappella, Joe Ko- cevar and Bob Vinson – formed the group because there are no local organizations that specifically address issues particularly for small and mid-size manufacturers. Northeast Ohio manufacturers are under


constant pressures to make their products better, faster and cheaper. Unlike large manufacturers that have resources and other advantages to weather difficult challenges and com- petitive threats, small and mid-size manufacturers have only their abili- ties and limited resources to survive the fierce and unforgiving realities of


their industry. On top of the general issues that all busi-


nesses contend with – managing employees, customer demands, marketing, regulations – manufacturers have unique challenges with producing all types of products, which can be extraordinarily difficult and complicated. When Kocevar worked in Michigan as a


manufacturing engineer, he joined a group that met once a month to talk about com- mon problems and solutions. He recalls how good it felt that he was able to help others and how other members in the group helped him when he was in a bind. There are no membership dues or other


qualifications to join the Lake County Manufacturing Roundtable. Its informal meetings typically draw plant managers, su- pervisors, engineers, consultants and others. The group’s moderator kicks off each


meeting with a question such as: What keeps you up at night? What can you do when a major customer demands a price re- duction? Are you measuring the right things in your business? Do employee incentive


S END YOUR L ETTERS /COLUMNS EDITOR@LAKEBUS INE S S JOURNAL .COM


plans really work? What are your production variability issues? How do you manage a random visit from federal safety inspectors? Naturally, the group also discusses techni-


cal issues involving lean manufacturing, Six Sigma, theory of constraints, quality, automa- tion and other topics. For some meetings, a guest speaker is featured. Occasionally, the group has held meetings at a member’s plant. “I remember someone saying at a meeting


that none of us here are going to claim to be the expert,” Hocevar says. “But among all of us meeting in a room, we have phenomenal expertise in all aspects of manufacturing. That can be pretty powerful.” Indeed, that can be powerful, especially for


small and mid-size manufacturing company managers who will readily admit they need all the help they can get to gain any type of competitive edge in today’s sluggish economy. Although the stated mission of the round-


table is to help its members grow, the second part of its mission statement is to “positively impact the region’s manufacturing commu- nity.” Now that’s a mission well worth investing


in.


In addition to being a Lake County contributing editor for the Tri-County Business Journal, Peter Strozniak is a communications and media entrepreneur. Visit his website at making-words-work.com.


GUEST COLUMN Obama’s health care plan bad for Ohio T


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Phone: 440-510-2000 • Fax 440-510-2001 Published 10 times per year.


Tri-County Business Journal is an Ohio registered trade name. No part of this publication may be reproduced without the consent of the publisher. All rights reserved.


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he Patient Protection and Affordable Care Act would be a great title if it actually protected


patients or made health care more affordable. The trouble is President Obama’s health insurance plan does neither. How do I know? In the six


Mary Taylor


months since Gov. John R. Kasich appointed me director of the Department of Insurance and advocate for Ohio insurance consumers, I’ve spent the bulk of my time defending Ohioans from — of all places — the federal government. I’ve quickly learned that the president’s


job-killing health care plan is bad for consumers, bad for Ohio and bad for our state insurance market. Plus, there is no way to avoid the looming higher healthcare insurance premiums for everyone. That’s more money coming out of your pocket to pay for an already broken health care system. Obama’s health care plan is so convoluted


that recently the White House finally acknowledged in media reports that it would have to fix a “glitch” in the federal law that would allow millions of families with incomes of as much as $64,000 to qualify for free health care from the government. How are individual states supposed to implement a measure that Congress, the president and their advisors can’t figure out? Leave it to Washington to think it knows best how to insure Ohioans. The federal health care law forces many


Member:Western Lake Area, Willoughby Area, Mentor


Area, Madison-Perry Area, Painesville Area and Lake County Cham- bers of Commerce, Heights-Hillcrest Regional Chamber of Com-


merce, Lake Communicators, Lake County Development Council, Lake County Visitors Bureau and Lake County Entrepreneurs.


new mandates onto states that are overly burdensome, including a huge and costly Medicaid expansion, the creation of a new health insurance regulatory bureaucracy and


one-size-fits-all market reforms that limit states’ discretion to regulate health insurance. It is concerning that even the less controversial parts of the new law come at a great cost and burden to Ohioans and our job creators. Probably the most discussed


and highly controversial part of the


new law is the individual mandate where the federal government is telling Ohioans (and Americans) that you must buy health insurance coverage or pay a hefty penalty to the government. Additionally, the law requires employers


with 50 employees or more to provide qualified health insurance coverage or, you guessed it, pay more penalties to the government. For employers, this is a very strong incentive not to create more jobs beyond 49 employees — or worse — to shrink businesses and lay off people to avoid paying the penalty. Further, the federal government will


subsidize coverage for people up to 400 percent of the federal poverty level. This means that, using today’s rates, government will pay a portion of the health insurance for a family of four making nearly $90,000 a year or for an individual making more than $43,000 a year. The federal government will fund the subsidies with penalties and fees charged to individuals and employers, and by cutting approximately $436 billion from Medicare, including reimbursements to Medicare providers. Much of the focus of implementation at


the state level is on the creation of health insurance exchanges. The president’s plan proposes two new insurance exchanges in each state meant to be one-stop shops for


purchasing health insurance. One exchange is designed for individuals


and the other for small businesses to find, compare and purchase health insurance coverage. Setting up such an exchange is expensive and time consuming. If individual states refuse, the federal government will do it for them. Finally, there are a series of market


“reforms” that will significantly impact Ohio’s health insurance industry. Whereas many states have only a few health insurance companies doing business in their state, Ohio has more than a dozen. Partly, this is because the rating rules in Ohio are relatively flexible. For individuals, insurance coverage is


priced based on an individual age, health status, tobacco usage and other factors. For small businesses, the group is rated similarly. As a result of the president’s plan, Ohio will be forced to narrow the rating requirements from many different combinations to only four. This will cause insurance premiums to go up for Ohio families. To make matters worse, this increase is


on top of the increase in price that will come from the additional mandates the new law requires. Unfortunately, while being sold as health


care “reform,” this new law serves only to trap individuals and employers in the same dysfunctional cycle in which they have been participating for years, but now with even higher premiums and a severely damaged insurance market in Ohio. I will do everything I can to protect Ohio’s citizens and job creators from this catastrophic law.


Mary Taylor is Ohio’s 65th lieutenant governor. She was named by Gov. John R. Kasich to serve as the director of the Ohio Department of Insurance.


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