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Through the Roof

You have two options: Find a way around skyrocketing health-care costs or start keeping more Kleenex around the office.

This story appears in the September 2002 issue of Entrepreneur. Subscribe »

In the mid-1990s, Ron Hatch, 56, owner of Hatch Furniture in Yankton, South Dakota, thought his costs were horrendously high. "Our premiums were rising at over 10 percent each year and were becoming one of our largest expenses," he says.

Then Hatch learned the true definition of horrendous. In the past three years, a confluence of factors has forced the furniture company's health insurance costs into the stratosphere. "Last year our premiums jumped by about 50 percent, since some insurance companies pulled out of South Dakota and more health-care rules were written into law," he says. Co-pays were raised for the furniture 's 28 employees. Unable to afford the higher fees, 19 workers no longer have employer-funded insurance, a move that could put their health in serious peril. The strategy backfired in terms of the budget as well: As the pool of insured individuals decreased, each person's premium rose, wiping out the savings Hatch was aiming for.

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