Small businesses anxious over looming insurance costs

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With lawmakers on Capitol Hill poised to end the longest shutdown in history, small business owners and middle-income earners across the country have been following the news anxiously.

Here on an Island with the second highest concentration of small business owners in the state, the focus of attention has been on the rising cost of insurance premiums if the federal subsidies that sustain those plans come to an end. 

With fears that current rates could soar in the new year for some policyholders, Islanders are expressing deep concern over an uncertain future, with some even saying that they are considering forgoing health insurance completely, or resorting to closing their own small business to find better insurance coverage through a full-time employer. 

Heather Mangione, owner of the dog-walking business Al Fresco Tails, said, “I hope people understand that when the federal government lets these subsidies expire, it’s not an abstract policy change — it’s something that hits real people, right here in our community. It means families have to make impossible choices. It means small businesses might not survive these changes.” Mangione, 39, and her wife, Cay, 40, who own the business together, saw their monthly cost for Harvard Pilgrim coverage through the Health Connector rise from $300 to a quote of more than $1,500 last week for the same plan when the loss of subsidies are factored in. 

This couple pays for insurance themselves, like many small business owners, through the Massachusetts-based Health Connector, which is, for many, the best marketplace for an affordable option.

Now that they’re in the open enrollment period for their plan, they have to decide whether to accept that rate, search for other ones, or leave their beloved small business behind to find a job that offers coverage. She said they’re not sure how to move forward. 

Mangione and her wife are hardly alone. In an effort to answer some difficult questions and find more resources, Mangione posted about her experience with insurance on her Instagram page. Afterward, she said she was contacted by many small business owners who saw similarly dramatic price hikes in their plans. 

“The responses were immediate and emotional. So many people reached out privately, saying, ‘I’m in the same position,’ or ‘I don’t know what I’m going to do either,’” Mangione said. “A lot of people here are self-employed — tradespeople, freelancers, caregivers, artists, small business owners — and these proposed hikes hit all of us hard. The cost of living is already high, and now with insurance potentially going up this much, it’s another huge burden on a community that’s already stretched thin.”

While Islanders like Mangione navigate the uncertainty, news about the continuance of the tax credits broke in Washington, D.C., this week.

On Monday night, eight Democrats in the U.S. Senate broke party ranks after a 42-day stalemate and voted to end the government shutdown, and to make certain agreements, such as back pay for federal workers and an eventual end to the health insurance tax credits that the shutdown was premised on for the past month-and-a-half. 

The House is expected to vote on the spending bill that would effectively end the government shutdown on Wednesday night. With President Donald Trump’s signature, the bill will likely result in the subsidies ending in January, leaving millions of small business owners, families, and individuals with doubled, tripled, or even higher increases in their monthly health insurance costs.

The tax credits were available through the Affordable Care Act, also known as Obamacare, and were geared toward middle-income earners who had trouble affording high premiums and weren’t provided with insurance through their workplace. Many locals said the tax credit subsidies provided a much-needed buffer for affordability. 

The local representative for Massachusetts Health Connector, the state-based health insurance marketplace that covers many Island residents, and serves 370,000 Massachusetts residents, is Dukes County coordinator Sarah Kuh. She said the loss of tax credits and subsidies is a sobering precedent. And she’s been fielding five to 10 calls a day from concerned residents who say they received emails that their premiums have gone way up. 

Kuh pointed out that the historical context of health insurance — despite the roots of it being a for-profit market — is that it can be affordable if the formula for cost-sharing is done in coordination between the employer and the employee. This is especially true for corporate groups, which can provide sustainable options for their employees. On the Island, however, there are only a few employers of that size. 

The hospital, schools, and municipal groups are some of the bodies that do offer attractive health benefits, but the economy of the Vineyard draws an unusually high number of small business owners, she said.

“We have a very high percentage of people here who are self-employed,” or who run “small businesses,” Kuh explained. The subsidies provide a cushion for many middle-income people in situations where corporate offerings don’t reach. “It just depends on their income, whether they qualify for any kind of help paying for anything or not,” she added. 

Kuh said there are families whose health insurance covers tens, if not hundreds of thousands of dollars worth of hospital bills. For many of those with pre-existing conditions, disabilities, or who have children with health concerns, these subsidies are the difference between having coverage and going without it.

“We have clients whose kids have special needs, for example, who are trying to evaluate what kind of plans they need, or what’s the best choice out of the bad choices, because they feel like they cannot not have insurance for their family,” Kuh said. 

“For many folks, it was already not great,” she continued. She said some families were paying around $500 a month with the subsidies, and were already struggling with the cost. “But if that’s going to $2,000 a month, that’s a whole different decision-making process.”

Jenna Sylvia, the former director of sales and marketing at The MV Times who recently started her own business with her husband, is another Island resident who is facing higher insurance premiums. She’s uncertain about how to navigate these times, and is fearful about what these changes could mean for young families. She and her husband, Zach, run a business called Coastal Coordination and Power, and have been navigating their own health insurance ever since. 

“Having this small business has always been a dream of mine, and I truly love just about every single part of it, besides the change that happened in health insurance,” Sylvia said. “A big deciding factor for me, and the one thing that could have prevented me from even starting this business, was the complicated healthcare system, and not having a ton of incentive for small businesses to be able to afford healthcare.”

She and her husband are in good health, in their early 30s, and pay $1,200 a month for coverage with substantial assistance from the cost subsidies — assistance that may be pulled from plans in January. “And it’s not even good coverage,” she pointed out. “We still have pretty massive copays for basic needs.” She said a tick panel to evaluate her husband’s Lyme disease diagnosis was quoted to them recently at $2,000, even with insurance. 

With the hikes in her premium — Sylvia said she’s not sure of those specifics yet — she said she doesn’t know where to turn. 

“It’s like we’re choosing between housing or healthcare at this point … Who can afford both?” Sylvia asked.