The $18 Doughnut

In Rochester, Minn., Cindy Daube is paying the price for being a good employer.

Daube’s bakery has been a Rochester institution for more than 20 years, with many employees there since the beginning. That means the bakers know the operation inside and out and the atmosphere makes everyone feel at home.

Uninsured and Unsure in Minnesota: a Three-part series about going without. Click here to read part one.

It also means that employee health care needs mount up: a baby for a waitress in the restaurant, asthma for a baker, cholesterol levels slowly rising. Cindy Daube’s health plan premiums crept up, too, from what was once a manageable expense to $70,000 a year for her aging staff’s high-risk group plan. Next year, if she kept the plan, it would rise again. And with the cost of dairy products and wheat continuing to rise, her expenses have long since outweighed her profits.

She doesn’t know what to do. “It makes me sick,” she said. “The system is sick. It’s forcing me to make a decision that I don’t want to make.”

After Daube’s lead baker left, a replacement applicant had it all: experience, the right skill set, the talent to produce quality products. But experience equals age. The baker was over 50, diabetic and in need of health insurance. Ultimately, he found another job, and Cindy looked elsewhere.

It was the same story with a baker who had multiple sclerosis. Daube’s health plan wouldn’t insure the baker for 18 months after hire. A chronic condition like MS requires treatment with no breaks. The baker couldn’t take the job.

A talented cook from the Ukraine ended up in the emergency room one night. The next day, she went back to the Ukraine, where health care is free and universal.

Some of Daube’s employees have asked to reduce their hours to become eligible for MinnesotaCare, the state health plan for low-income workers. More often than not, Daube has reluctantly had to tell people no.

Then came this year’s floods, compounding rising commodity and energy prices. Both grain and flour prices are expected to hit record highs this year. Daube will have to make more choices — shut down, or look for another health plan.

“You can’t charge $18 for a doughnut,” she said. “People just won’t pay it.”

To keep the doors open, Daube could stop offering a health plan and give employees a small raise to cover some of the cost of private health insurance. But those with chronic conditions may not be able to find coverage. Daube could look for a lower-cost comprehensive plan or one with only catastrophic coverage. She could increase her employees’ out-of-pocket premium shares. But none of these seem like good options.

This kind of decision is being weighed all across Minnesota. Small businesses’ profits are dropping, their expenses rising and the need for health insurance growing. Some have closed their doors. Some have quit offering health insurance altogether. Some, like Cindy Daube, are looking for alternatives to keep her employees insured. But options are few and far between.

MinnesotaCare has tight eligibility limits, for example $38,000 a year in gross income for a family of three, six months of state residency and an exclusion for past workplace coverage. Because Cindy Daube has cared enough to offer her employees insurance, they wouldn’t qualify for MinnesotaCare if she dropped her plan.

So now what?

Employers such as Cindy Daube are going out of business too often across Minnesota because they tried to meet the need for health insurance. If the rules for MinnesotaCare eased just a bit, businesspeople who care about their employees could breathe a little easier.

MinnesotaCare eligibility requirements should be revised for workers who can’t go four months without medication or treatment. Last year, the program ran a surplus of more than $200 million. Now it’s time to put it to good use.

For people with chronic conditions such as asthma or MS, waiting for health coverage is not an option. And for employers like Cindy Daube, going out of business in the face of rising health costs shouldn’t be, either.