Clinton Administration reform program may make coverage mandatory.
When L&C surveyed livery companies on health insurance recently, 100 percent of office-based operators reported that they have health insurance for themselves while 80 percent of home operators have coverage. Six out of ten operators indicate they make a health insurance program available to full-time employees. Nearly all of those who provide health insurance programs find it worth the monthly cost, which ranges from $55 to $480 per employee.
The primary benefit of health insurance for a livery operator is that it helps attract and retain quality employees.
“Health insurance helps keep my drivers happy,” says John Dart of Dart Limousine, who operates 13 vehicles from his home in Howard Beach, NY. “If you treat your drivers right, they will take better care of the cars.”
For the past four years, Dart has provided a program whereby full-time chauffeurs have access to single or family health coverage. Single coverage costs Dart nearly $200 per month per employee while each chauffeur pays an additional $85 per month. “It’s worth it,” he says, “because it helps keep my accident rate low, and it’s tax deductible.”
The median monthly premium reported by livery operators is $169 per employee. Twenty percent of respondents pay the entire premium for full-time employees. Most full-time chauffeurs, however, pay at least 50 percent of their health insurance premium. Nearly every livery company requires employees to pay the entire premium for a spouse or family, and all respondents require part-time chauffeurs to pay for 100 percent of their coverage.
Those operators who don’t provide a program generally feel it’s too expensive, even if employees cover part of the cost. This is a subject that will soon confront every employer, however, since mandatory health insurance is part of the health care reform program currently being prepared by the Clinton Administration. Within the next few years, livery operators may have no choice but to provide coverage for all employees.
Can Operators Survive?
In our survey, a vast majority of respondents said they would be forced out of business by mandatory health insurance. “I’d have to sell my cars and hang it up,” says Joan Labuda, of Coachman Limousine Service, a home-based company with five vehicles in Statesville, NC. At the same time, Labuda needs at least one full-time chauffeur during the spring and summer, and finds it difficult to keep a reliable employee without health insurance because of the limited labor pool in her area.
“I had to provide health insurance for one employee recently,” she says, “because he has a wife and an 18-month-old baby I had to cut my own wages and reduce the size of my yellow page ad in order to afford it.”
Ed Wood of First Class Limousine in Nashua, NH is shopping for health insurance in order to attract better qualified chauffeurs.
He hopes that offering health insurance will help him expand his staff of 20 full-timers to meet the growing demand for his share-ride service. First Class Limousine now averages 45 trips a day to Boston, and his volume this past May was $1,000 more per day than the previous year.
But Bob Levine of Hy’s Livery Service in West Haven, CT has found that health insurance alone may not be enough to attract and keep chauffeurs Levine started a health insurance program in 1987 to compete with other local employers but, “It was not a cure-all for coming and going,” he says.
One reason it didn’t work, Levine believes, is that the majority of his work is airport and funeral service rather than higher paying charters. So, two years ago, Levine ended the health insurance program for new employees, but continued it for office employees, a mechanic, and six chauffeurs who joined the plan in 1987. “Those people are the core of our business,” says Levine.
Health insurance tends to attract family-oriented employees according to Rich Guberti of Excel Limousine in Mt. Vernon, NY. “I’m all for getting that kind of people,” he says. Excel offers family coverage to full-time employees for $80 per month which is paid in weekly $20 pre-tax deductions. Excel pays an additional $220 a month per employee. “It’s well worth the cost,” he says, “and I’m also looking to start a 401k or profit-sharing program.”
As a member of the National Limousine Association Board of Directors, Guberti is looking for a group health insurance program that is affordable for NLA members across the country. Even though the NLA has nearly a thousand companies to participate in a program, no provider has yet offered affordable nationwide coverage.
Explore The Options
The fastest growing health care programs are known as Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), and Point of Service plans (POS). One hundred million Americans are currently enrolled in one of these forms of managed health care, and an estimated 75 million more will be enrolled in managed care by the end of the decade. Half of all employers in the U.S. currently offer employees two or more managed care options.
Health Plan Management Services in Atlanta evaluates HMOs on 29 measures of price and quality. Its HMO Buyer’s Guide is available to employers and gives top marks to 109 out of 413 HMO programs for high quality at a reasonable price. It also notes 114 programs that rank low in quality and high in price.
The quality of physicians is a key factor in rating a managed care program. One way to do this is to check the physician directory for the percentage of doctors who are board certified.
On the average, 70 percent of network physicians are board certified. Even though only 48 percent of all doctors in the U.S. are board certified, a percentage of less than 70 indicates that a program may have lower-than-average standards.
Another quality indicator among managed care programs is its practice of preventive care such as immunizations, mammography, diet, and weight control. At the Kaiser Foundation Health Plan in San Francisco, CA, the highest rated HMO for the past four years according to Health Plan Management Services, 99 percent of the children in the plan are immunized.
Blue Cross/Blue Shield was the leading health insurer among livery operators responding to our survey. Michael Chee, of Blue Cross/Blue Shield in California advises employers to look at an insurer’s financial stability as well as its health care program.
“Ask an insurance agent or the state department of insurance about the company’s payment history,” he suggests. “You don’t want a company that may not be able to provide service, or one that raises its rates unexpectedly. Some companies have a rate cap that sets a limit for annual increases.”
Business Supports Plan
The U.S. Chamber of Commerce recently endorsed the basic concept of mandatory health insurance as proposed by the Clinton Administration. The Chamber points out that, “Under the current system, business already pays for the uninsured.” Under the Clinton Administration’s proposed program, the Chamber feels that health care costs will be controlled more effectively and distributed more evenly.
Mandatory health insurance appears menacing to many industries, particularly those using low-wage and part-time employees. Still, the administration is determined to extend health insurance to the 37 million American who are currently unprotected, and the livery industry can expect to be swept along by this wave of reform.