Mark Sanchez: Kind of a forecast, but kind of a reality check and maybe a wakeup call for folks in the healthcare industry. The insurers, the providers, well, as far as all businesses, policymakers and Lansing on the national level. This, again, is something we've talked about many, many times on this program, and that is just this constantly rising cost of health coverage. Businesses of all sizes and their ability to afford to maintain employee health coverage.
Now this week comes a survey and data from the Small Business Association of Michigan, and for the first time we're seeing some small employers say, this is getting to the point, the tipping point, the breaking point, fill in what you want to call it, where we may, within a few years, have to drop health benefits. It's some interesting data there because these double-digit increases have been hitting businesses of all sizes hard for the last few years. And in this SBAM survey, more than four in 10 of the respondents said that they may have to make a decision on eliminating health benefits within one to three years. And there's another 16% say they may have to consider dropping health benefits within four to six years. Now that's kind of some new findings in this survey data for SBAM. And this has some ramifications.
When you talk about, boy, if employees that these small businesses don't have health coverage, do they move on? So, what's the ability of a small business to try to retain those employees against a larger corporation that may have a better ability to absorb these costs? You're going to see that. You're going to see perhaps if more people are without health coverage, increased uncompensated care to doctors and health systems. And talking to Sheri Welsh, she runs an executive recruitment and search firm down in Kalamazoo and chairs the SBAM board this year. She raised a good point which is these high healthcare costs that businesses are absorbing they need to make those costs up somewhere else.
So maybe they're not doing as much marketing, as much promotion, as much advertising. We're seeing SBAM data now two years in a row saying small businesses are curtailing hiring. They're curtailing growth plans because they can't afford to bring more people on the payroll to help run the business because of these high healthcare costs. So perhaps they're resorting to more technology, internal processes, using artificial intelligence to do some things within the business. And Sheri Walsh really raised a great point, which is a lot of small businesses, and she said this is the part of why they love being small business owners, they're involved in the community.
You see their banners on the fence at the Friday Night Football game. You see them sponsoring your local downtown festival or events or sponsoring that fundraising golf outing, sponsoring a foursome, or sponsoring, you know, fill in the blank. If they keep absorbing these high healthcare costs, that's money they're not going to have to start supporting things in the community.
So, there are some real consequences to these constantly rising healthcare costs, and they're showing up more and more in these surveys, and in this particular survey data from the Small Business Association of Michigan.
Patrick Center: Any indication that SBAM leadership is talking with state government or bringing awareness at the federal level?
Mark Sanchez: Always they're talking to the state government, the policymakers and Lansing. And there's an interesting aspect that we've seen begun to get floated here this year. Brian Calley, the CEO of SBAM has talked about it last few times I've spoken with him, which is, you know, we need more transparency on what's driving costs. We've seen the issues with Blue Cross Blue Shield of Michigan versus Michigan Medicine right now and they are at a big contract impasse, and Michigan Medicine may drop out of the Blue Cross Network here at the end of June. We've seen this play out in other communities between insurers and health systems.
And Brian's point is we've heard a lot the last couple of years, especially from Blue Cross, that we've seen this big consolidation in Michigan. The health systems have gotten much bigger. Corewell/Beaumont’s deal a few years ago. We've seen other consolidation in Michigan. And that makes for a bigger health system that has more negotiating power with the insurers and they have more pricing power. So, there's been a lot of finger pointing back and forth.
Blue Cross is saying the health systems are raising prices too far. We need to control it. And that's part of what that contract difficulty between Blue Cross and Michigan Medicine is all about. So, Brian's advocating this idea, and we've seen this elsewhere. The (Michigan) Speaker of the House, Matt Hall, has floated this about transparency and how hospitals set prices.
Now, we see this in public utilities. Electric companies and gas companies have to file their rate proposals to the Michigan Public Service Commission for review so we can see exactly what's driving costs. What's driving price increases. Your health plans, your HMOs have to file their rate proposals each year. And those are due for the small business, small group in Michigan here real soon this month. They have to file to the state and the regulators, take a look. And you can look at those proposals and see what's driving their costs.
Hospitals and health systems don't have that same requirement. So, we're seeing some folks, again, Brian Calley at the Small Business Association of Michigan is saying perhaps it's time to start looking at this and have some kind of a system of price transparency and what's really driving these healthcare costs. We've heard so much from the insurers saying it's the specialty drug, it's the higher utilization, aging population that's using more care. We're seeing higher acuity in cases. So, what's really driving these costs? Brian's saying we need more transparency and now perhaps it's come a time to start putting a regulatory system in place that brings more transparency to how hospitals are setting these prices.
Patrick Center: We're talking with Crain's Grand Rapids Business staff writer Mark Sanchez. Speaking of insurers, Grand Rapids-based Acrisure, the fintech making headlines recently but for two very different reasons.
Mark Sanchez: Yeah, two very different reasons. We saw Acrisure last week say, hmm, things are perhaps getting a little lean and AI and technology can do more of running the business. So, we saw a big, big, not an announcement, but it was a memo that was sent to the employees at Acrisure. Twenty-two hundred and fifty layoffs this year that Acrisure is going to hand down around the world. It's become this big global benefits insurance company with the insurance brokerages. I believe it's in the top 10 as an insurance brokerage globally now. So, it's looking at making some cuts and that's going to have ramifications here for Grand Rapids.
We don't know just yet where these cuts are going to occur, but you have to presume the company being headquartered right here in downtown, something's going to happen here over the next several months.
At the same time, as you say, we saw the opening of the new amphitheater here in downtown, just on the south end, and that's a big deal. It was a successful opening. Acrisure has the naming rights for that stadium. And this kind of a side point, this is a story my co-worker here at Crain's Grand Rapids, Kate Carlson did the other day, that Grand Action 2.0, that's behind the Acrisure Amphitheater and the development of the soccer stadium here in downtown, is now looking to bring a major mixed use housing project envisioned immediately south of Acrisure Amphitheater.
It's a formal development that's not yet been signed as far as any agreement. But Grand Action 2.0 is talking to a firm about this potential mixed-use component that would add to that area, that neighborhood here on the south end of downtown. And you may see some tax incentive packages come forward and that could reach about $270 million and the project could include up to 500 apartments. And that's kind of according to an initial proposal. It's now not just the amphitheater down in that neighborhood, but broader development that could bring some housing units down to the riverfront property.
Patrick Center: Crain's Grand Rapids Business staff writer Mark Sanchez, thank you so much.
Mark Sanchez: Thank you, Patrick.