Everett small business owner struggles with health insurance rate hike

EVERETT — When Nathanael Engen went to renew his health insurance this year, he had sticker shock.

Engen, the owner of urban mushroom farm Black Forest Mushrooms, was set to receive a 39% increase to his company’s healthcare premiums at the start of 2025. He pays 100% of the premium for the nine employees covered by the insurance, provided by Regence BlueShield, and called the increases “unethical.”

“This just can’t fly,” Engen said. “We’ve got to do better. I’m over here screaming from the mountaintops, begging for help as a small business for someone to listen to us. It’s like pulling teeth from a hippopotamus just to be able to get any traction.”

Insurers, however, said rates had to rise due to the increased costs of medical care. In a statement, Regence BlueShield said it “fights to keep care affordable and efficient” by negotiating with doctors, hospitals and drug companies for the lowest possible prices.

“Health insurance rates reflect what we expect care to cost,” a Regence BlueShield spokesperson, Ashley Bach, said in an email. “The main drivers of rate changes are increasingly high prices for medical care and prescription drugs. This is why we negotiate with doctors, hospitals and drug companies for the lowest prices possible for our members.”

In response to the possible rate increases, Engen switched health insurance providers. He moved to UnitedHealthcare, which came with an increase of 11% over his 2024 rates.

In 2024, Engen paid an average of $451.31 per employee for coverage. That was set to rise to $629.02 in 2025. The average cost per member per month for Regence BlueShield plans will be $688.76 per month this year, according to the Washington Office of the Insurance Commissioner, which regulates the insurance industry.

Average rates for Regence BlueShield’s small employer plans rose by 15.36% in 2025, state regulators said. It marks the company’s highest single-year rate increase for small employer plans since 2011, records show. Black Forest Mushroom’s plan, EmployeeChoice Gold 2000, was set to increase its base rate by 15.17%. The rest of the increase to Engen’s company would have come from other changes in its workforce, Regence BlueShield said.

“A renewal proposal for a small business, like the 2025 proposal for Black Forest Mushrooms, could be impacted not just by the rising cost of care but also by changes in the small business’s workforce, like number of employees, their age, and number of dependents,” Bach wrote. “Because small businesses have a relatively low number of employees, these changes in workforce demographics can lead to significant decreases or increases in premiums for a coming year.”

Premiums mostly pay for medical claims and company operating costs. About 83% of health insurance premiums paid to Regence BlueShield are used to pay out customers’ insurance claims, state regulators said. Just over 14% goes toward administrative costs like offices, equipment and staff salaries. Regence BlueShield keeps about 2.5% as profit.

Engen also found it difficult to obtain health coverage in the first place, he said. Small businesses with under 50 employees are not required to provide health insurance. Any company with more than one employee, however, is eligible for employer-sponsored health care coverage from Regence BlueShield, Bach wrote.

In a report issued last August, the Washington Office of the Insurance Commissioner studied a number of policies that could lower insurance costs. One is reinsurance, where state and federal funding would cover certain high-cost claims. Others included increasing the medical loss ratio standard, requiring insurance companies to spend more on claims or using reference-based pricing, which ties prices of certain types of medical care to a percentage of Medicare reimbursement rates.

Some other options raised by the regulatory office included regulating prescription drug prices or introducing a public option, a government health care insurance program that would compete with private insurers.

Will Geschke: 425-339-3443; william.geschke@heraldnet.com; X: @willgeschke.