Message from the President

Managing Health Care Costs as a Small Business

Every year, we spend three months war-gaming for our corporate health care renewal. Chameleon Integrated Services’ goal every year is to limit the increase in costs the health care industry levies on our work force. The starting point is the same each year—a double-digit percentage increase from last year. What follows is a request from other health insurance carriers on their cost to support our work force. This ultimately leads to a showdown with our current health care provider to negotiate the increase down to a level that is “manageable.” That “manageable” cost has averaged between 5-10% year after year.

Having recently celebrated our 14th year in business, you can do the math. The 5-10% increase every year outpaces inflation. It outpaces the cost of living adjustments. It outpaces the salary increases at annual reviews. It outpaces escalation rates on base plus two, three, and four-year option federal contracts. In an environment where the government seeks reduced IT costs and the labor market is tight, how do we as a small business federal contractor community manage these increases?

The best skilled employees want good benefits from their employer, including health care. On average, the government seeks experience and skill from its contractor work force. That experience and skill often comes with age—age that could include an employee being a spouse or parent supporting a family. Spouses and families need to go to the doctor for physicals, wellness visits, checkups, etc. What is the solution?

I believe if we passed the 5-10% increase in cost each year to our invoice-paying customers, we will be fired—every time. If we pass the 5-10% increase to our employees, we will not be a competitive employer. Being an owner of a solution-driven business, it troubles me to say I cannot find the solution. However, it is refreshing to know that it is not just me.

Jeff Bezos from Amazon, Warren Buffet from Berkshire Hathaway, and Jamie Dimon from JP Morgan Chase see the same issue on a much larger scale than small businesses. All three of them have publicly committed to finding the solution through the formation of their own health care company as a way to manage health care costs. I hope they are successful in their endeavors and that their success can be shared with the small business community. (Click here to read about their plans.)

In the meantime, Chameleon must find other solutions to address unmanageable health care costs. I believe that the time is now for an industry co-op that can pool work forces with volume to negotiate lower increases in health care costs. I heard this described as a “union” by a peer the other day. I am unclear if it is a “union,” co-op, or what form it takes. However, what I am clear on is that our survival as a small business community depends on it.

Drew Acree
President at Chameleon Integrated Services


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