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• DISCUSS Have your health care costs gone up?

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• TRANSCRIPT Small biz Q&A

So did Dan Greenbaum, president of a research firm in Boston, who’s been told to expect a 35 percent jump. And Sandy Bouchard, chief financial officer at Coady’s Towing Service in Lawrence, is trying to fathom a 28 percent hike – an extra $58,000 – in 2010.
“We’re a small company, and that’s a huge raise,’’ said Bouchard. “How much more can you expect an employer and its employees to contribute?’’
At a time when both the state and the nation are struggling to rein in health care costs, many small businesses in Massachusetts say they’re receiving the largest premium increases in years for their Jan. 1 renewals. Insurers in September said they expect to raise premiums an average of 10 percent next year, but some employers are facing increases that are double or triple that – or even higher.
While all of the state’s health insurers have been jacking up rates for small businesses, which lack the negotiating might of larger enterprises with hundreds or thousands of employees, some of the steepest increases have been coming from Blue Cross and Blue Shield of Massachusetts. The Boston insurer, the state’s largest, has in the recent past offered lower base rates than many of its rivals.
Allen P. Maltz, Blue Cross executive vice president and chief financial officer, acknowledged that premiums are climbing – largely, he said, because of double-digit rises in medical costs.
As for the small employers that have received the steepest increases, “something else is going on,’’ he said. Their mix of employees may have changed, with younger workers let go during the recession, leaving an older workforce that costs more to cover. Carroll, for example, reduced the workforce at his paint equipment business from 11 to seven workers as the economy slowed.
Still, small businesses, historically the biggest engine of job growth in Massachusetts, are crying foul. “We bear the brunt of all cost increases,’’ said Carroll, president of Norris Wiener/Bay State Spray Equipment in North Billerica, which sells machines that coat and finish anything from golf balls to furniture. “It makes it impossible to grow. Every time you want to hire employees, your health costs go up.’’
Carroll said his company already has responded to the proposed Blue Cross premium increase by switching to a competing insurance carrier, Fallon Health Plan of Worcester.
Andover insurance broker Jim Edholm, who helps small businesses choose plans, said about a dozen of his clients who have Blue Cross plans face increases of 20 percent to 45 percent Jan. 1.“They’re catatonic when they hear the numbers,’’ said Edholm, founder of Business Benefit Insurance. “It’s a horrifying shock.’’
According to Blue Cross, the majority of its customers have been redesigning their plans through “buydowns,’’ which use higher deductibles and other features to shift more of the cost to employees.
While it has not completed setting its rates for next year, Blue Cross estimates that small businesses that change their plan designs, and have a “stable’’ age mix in their workforces, will see average premium increases of 10 percent to 12 percent. For those that choose to keep their current more generous plans, the insurer’s estimates are closer to 15 percent to 18 percent.
Businesses receiving increases of 25 percent or higher, Maltz said, are outliers that typically are trying to stay with their current plans despite having some kind of change in the demographics of their insured. He declined to discuss the cases of individual customers.
“The main driver in insurance premiums is the cost of health care,’’ Maltz said. Another factor, he said, is the state universal health care law, which has compelled insurers to merge newly insured individuals – a high-cost group – into small-business insurance plans.
With government capping reimbursements for Medicaid and Medicare, health care providers are seeking to make up the difference from private insurers, who pass the higher costs onto businesses. “There’s a cost shifting going on,’’ said Vincent M. Graziano, vice president at the benefit consulting firm Segal Co. in Boston, which advises larger employers. “Small business usually bears the highest costs because they don’t have the same clout as the big companies.’’
How insurers set rates for employers, including small businesses, is one of the subjects of public hearings being held throughout November by the state Division of Insurance.
Edholm, who offers insurance advice to high-tech startups, law and engineering firms, machine shops, and other businesses with fewer than 200 employees, said many have transitioned in recent years to cost-saving “high deductible’’ plans. Such plans allow employers to pay lower premiums, but require employees to pay deductibles of $1,000 or more for hospital visits.
Insurers such as Harvard Pilgrim Health Care of Wellesley and Tufts Health Plan of Watertown offered high deductible plans before Blue Cross, which sought to pick up market share by offering a discounted plan last year. The insurer wound up badly underestimating its costs and losing money, insurance brokers said. They said many in the industry view Blue Cross’s outsized increases to some small businesses next year as an effort to recoup those losses.
Maltz acknowledged that Blue Cross lost money in 2008 on some high deductible plans for small businesses. But he strongly denied the insurer is trying to make up for it now with higher premiums. “Each year stands on its own, and we try to set the rates right,’’ he said. “We never try to set premiums to recoup losses from a prior year.’’
But that is small comfort for businesses faced with huge jumps in their insurance rates. Greenbaum’s research firm, Health Effects Institute, already pays about $14,000 per employee to cover its 25-person staff. The proposed 35 percent increase by Blue Cross has sent the firm scrambling to look for an alternative plan or carrier.
Greenbaum, whose firm studies the health effects of air pollution and helps to set emissions standards around the globe, said he and his management staff have had to take time away from research to focus on the arcane details of insurance changes.
“We feel whipsawed by whatever the insurance companies do,’’ he said. “We obviously can’t just eat a 35 percent increase,’’ he said. “I just don’t understand how they can come forward with that. It almost seems like they’re trying to push out the small employers.’’
Robert Weisman can be reached at weisman@globe.com.

Associated Press

Under the terms of a $50 billion bailout it received from the Treasury starting last December, GM agreed to repay the government in two forms: a $6.7 billion senior note and a 60% equity stake. The Treasury plans to start selling off the equity stake after GM launches an initial public offering.
The note is due in July. Under its government agreement GM can use taxpayer money to repay the loan. GM still has $13.4 billion in an escrow account that came from its U.S. bailout, or twice the amount it needs to pay back the government back.
While repaying the loan promises to further bolster the health of the company’s balance sheet, it also locks up cash that could be used to fund operations if the U.S. economy continues to slump, or if GM cannot arrest a severe decline in its sales and market share.
GM will also say Monday that it will pay $200 million per quarter to the Canadian government, which also loaned GM billions of dollars and converted most of that loan into equity.
Another factor that allowed GM to set up the repayment schedule is the relative health of its parts-supplier base, this person said. Because fewer supplier disruptions have occured in a weak economy than were expected, GM didn’t have to bail out as many of its parts makers as it had planned for.
GM may restructure its payment schedule on the note after it issues an IPO if it sees fit, said the person familiar with the situation. GM had been planning to go public in late 2010, but the company’s chairman, Edward E. Whitacre Jr., said last week it is too early to predict the timetable for GM’s return to the stock market.
There is a chance the company won’t launch an IPO until after the entire $6.7 billion note is paid.
GM’s turnaround effort will come under new scrutiny Monday as the company reports financial results for the first time since emerging from bankruptcy.
GM is expected to update its cash position, indicate how close it is to earning money in North America, and give a progress report on restructuring its Opel unit in Europe. But one part of its strategy appears to be working: China.
GM’s sales are expected to have doubled in China in the third quarter from a year earlier and are now running neck and neck with the Detroit auto maker’s U.S. sales.
The company’s 478,000 vehicle sales in China helped GM remain a relevant player on the global auto stage, and—more importantly—provided much-needed profit for GM’s international operation, according to a person familiar with the results. The country now accounts for at least 25% of GM’s global sales, compared with 10% a year ago.
But for GM Chief Executive Frederick “Fritz” Henderson, the most positive story lies in China, where government-sponsored sales incentives and the popularity of the Wuling microvan venture GM partially owns lifted the company’s auto sales 34% in the first nine months of this year compared with a year earlier. GM’s share of the China market has increased as well, climbing to 13.4% in the third quarter from 12% a year earlier and cushioning the company’s lead over its rivals.
GM’s China business, which wasn’t included in bankruptcy proceedings in the U.S., is composed of a web of ventures with Chinese auto makers. Profit is spread across those partnerships and to other parts of GM’s organization, such as GM-Daewoo in South Korea.
The car maker doesn’t include Chinese vehicle sales in its revenue, and the business isn’t a source of cash to rebuild operations elsewhere in the world, but profit from the China ventures flows to GM’s bottom line. GM doesn’t break out results for its China unit.
The company in July decided to base its international unit in Shanghai, and an increasingnumber of GM’s global purchasing and development duties are being moved there.
The China joint ventures are a critical platform for GM’s growth in several emerging markets. For instance, the company will team with China’s SAIC Motor Corp. to expand in India. It also plans to ship Wuling vehicles, including a coming sedan, to a variety of developing nations.
To be sure, GM needs to turn around its ailing North American business if it hopes to be viable. The U.S. serves as the hub of GM production and is still seen as offering the most profit potential of any market in the world.
The third quarter will give a fuzzy picture of GM’s progress at home. While costs have plunged thanks to layoffs, debt reduction and plant closings, the North American operation is a shell of its former self.
The car company lost considerable U.S. market share during the third quarter, falling to 19.5% from 24.5% a year earlier. It also nearly halved production and increased per-vehicle spending on sales incentives, according to Autodata Corp. Even with the benefit of the U.S. government’s “cash for clunkers” sales-incentive program, GM’s sales volume fell.
Momentum in China isn’t necessarily lining GM’s pockets, at least not yet. The bulk of the sales in China are credited to Wuling, of which GM owns about a third. Wuling vans and small pickup trucks are generally strong among commercial buyers and farmers, and can be bought at a fraction of what U.S. vehicles cost.
GM is on track to sell nearly two million vehicles this year in China, about as many as it is likely to sell in the U.S. Two-thirds of the Chinese sales are likely to be Wulings, with the balance going mostly to the Buick and Chevrolet brands. Buick is GM’s mainline brand in China.
Profit aside, momentum in China is critical to GM’s ability to keep pace with other global industry heavyweights, notably Volkswagen AG and Toyota Motor Corp. Both are expected to surpass GM in global sales this year, but those leads are likely to be muted by GM’s strength in China. Sales in China have helped GM fill the hole left by the weakness in the U.S. and softer sales in Europe.
China isa rare pocket of growth amid GM operations that have been sinking for years. In the three years spanning 2006 to 2008, GM lost market share in 12 of the top 16 markets where it sells vehicles. It is gaining share in China.
Write to John D. Stoll at john.stoll@wsj.com

Globe Staff / November 1, 2009

RAYNHAM – Head to the back of the Wal-Mart Supercenter in Raynham and you may be in for a surprise.
Here, about 50 flat-screen televisions hang from the wall, a 60 percent increase in recent months. Trained sales staff approach customers about their electronics needs and offer home installation and consultation services for computers and entertainment systems. It all feels very much like Tweeter or Circuit City, two of the major electronics chains that shuttered over the past year.
While other merchants have gone bankrupt or struggled to survive during this recession, Wal-Mart Stores Inc. is growing its empire and capitalizing on the holes left behind. The discounter behemoth has embarked on an aggressive remodeling effort known as “Project Impact’’ that focuses on an easier shopping experience and an expanded selection of products in electronics, home goods, and fresh foods.
“There’s an opportunity for growth in these areas – it’s a trend we’re seeing in the stores due in part to the challenging economic times,’’ said Wal-Mart spokesman Steven Restivo.
A dozen of the 50 Wal-Mart stores in Massachusetts, including the one in Raynham, are among the retailer’s shops nationwide that will be remodeled by the end of the year. Retail analysts say the emphasis on electronics and home goods makes sense with the departure of major chains such as Circuit City and Linens ’N Things, as well as consumers’ increased focus on value. Wal-Mart has added upscale cookware lines from celebrities like Southern-cooking celebrity Paula Deen and created boutiques within the home department to feature merchandise out of the box.
“While other retailers struggle, their business model enables them to take advantage and build market share,’’ said Madison Riley, a retail analyst with Kurt Salmon Associates, a consultancy in Boston. “Wal-Mart is being aggressive in these challenging economic times, as they should. Consumers’ behavior has changed – they shop for value more now than ever before and Wal-Mart’s position is perfectly suited to this new consumer demand.’’
Some retail analysts say Wal-Mart’s new approach is an effort to appeal to more upscale consumers and undermine cheap chic rival Target. In August, US Wal-Mart stores saw traffic increase 1.3 percent from a year ago while Target saw traffic decline 2.6 percent from the year before.
The change is most apparent in the electronics section in the Raynham store, which has doubled in size since the makeover this summer. The shelves are lower so it’s easier for staff to spot customers in need and for shoppers to reach merchandise. The department now features an entire wall display of Blu-ray DVDs, with about 100 titles, up from 30 movies earlier this year.
Raynham store manager Bert Cabral, who noted that his shop is the busiest in Massachusetts, also talked about hiring a manager from one of the big electronics chains to help improve Wal-Mart’s customer service efforts.
“They give a whole new perspective and improve our approach to customers to provide more aggressive hospitality,’’ Cabral said. “We feel we can be more competitive in these areas.’’
Retail analysts say the longer the economic recovery takes, the more success Wal-Mart will have holding its core customer base and expanding beyond it. In some cases, this shift could make it more difficult for other, smaller merchants to survive.
Wal-Mart is banking on more frequent visits from shoppers by offering a larger selection of beer, wine, bread, fresh-cut fruits, and other groceries, along with a larger pharmacy area with more privacy for consultations.
Everywhere shoppers turn in the Raynham store, they are reminded of value with big new signs emblazoned with “Unbeatable Prices.’’ At the same time, the chain has reduced overall inventory by at least 6 percent to make the store less cluttered and address reduced consumer spending. Cabral says the new strategy is working, with sales up 5 percent since the store redesign this summer.
Cecelia Peterson, who previously bought her electronics at Circuit City in Plymouth, is now shopping at the Wal-Mart in Raynham for her DVDs and prepaid cellphones. She also started doing more food shopping here since the store increased its selection.
“The prices are just good here. You can’t beat them,’’ Peterson said.
Jenn Abelson can be reached at abelson@globe.com.

Globe Staff / October 24, 2009
President Obama blasted critics of his administration’s environmental policies and praised Massachusetts officials for advancing technologies that will yield big benefits for the environment in a speech yesterday in Cambridge.
Speaking for about 20 minutes before a capacity crowd at the Massachusetts Institute of Technology’s Kresge Auditorium, Obama described the university as a leader in the development of alternative energy technologies.
“Extraordinary energy research is being conducted at this institute,’’ he said, mentioning windows that generate electricity, viruses engineered to build batteries, more efficient lighting systems, and “innovative engineering that will make it possible for offshore wind power plants to deliver electricity even when the air is still.’’
According to the White House, Obama’s speech was designed to be a challenge to Americans to lead the global economy in green energy.
“Even in the darkest times, this nation has . . . always sought a brighter horizon,’’ Obama said, adding that countries around the world are “engaged in a peaceful competition’’ to develop new energy technologies.
“From China to India, from Japan to Germany, nations everywhere are racing to develop new ways to produce and use energy,’’ he said. “The nation that wins this competition will be the nation that leads the global economy. I am convinced of that. And I want America to be that nation. It’s that simple.’’
A number of clean energy advocates say the United States lacks a national policy to guarantee long-term financial incentives for companies to build renewable power. The Senate is attempting to pass such legislation before a December meeting of 190 countries in Copenhagen to hash out a treaty to lower emissions from power plants, vehicles, and factories.
Obama’s speech was received with enthusiasm by the crowd, which included executives from Massachusetts clean energy companies, local politicians, Patrick administration officials, and students and professors from MIT, who cheered when the institute was mentioned. A number of Massachusetts officials merited mention in the president’s speech, including Senator John F. Kerry and US Representative Edward J. Markey, whom Obama called leaders in the pursuit of clean energy.
The president also was in town to campaign for Governor Deval Patrick, whom he called “my great friend and a champion of science and technology.’’
Citing the forthcoming groundbreaking for the new Wind Technology Testing Center in Boston, which received $25 million in federal stimulus money, Obama said, “Governor Patrick’s leadership and vision made this happen. He was bragging about Massachusetts on the way over here – I told him, ‘You don’t have to be a booster. I already love this state.’ ’’
Obama said the benefits of the project would extend beyond the jobs created here, allowing “American businesses to develop more efficient and effective turbines, and to lead a market estimated at more than $2 trillion over the next two decades.’’
Clean energy has been a longstanding priority for Patrick, and many Massachusetts academic institutions and businesses are pursuing clean energy technologies, including MIT. MIT and the University of Massachusetts at Amherst are among the 46 Energy Frontier Research Centers established earlier this year with federal stimulus funding.
“MIT is the epicenter of the technological renewable revolution that will be deployed around the country and around the world in the years ahead,’’ Markey said in an interview before Obama’s speech. Markey, a Malden Democrat, is a cosponsor of a proposed bill to set emission standards to help combat global climate change. Kerry has cosponsored a similar bill with Senator Barbara Boxer of California that is before the Senate.
Markey credited Patrick with making so-called green issues a priority in Massachusetts.
Shortly after coming into office, Patrick signed on to the Regional Greenhouse Gas Initiative, a 10-state coalition to reduce carbon dioxide emissions from area power plants by making them pay for pollution they emit. Last year, Patrick signed five pieces of environmental legislation.
Today, the state is on track to have roughly 30 megawatts of wind generating capacity, or enough to power nearly 7,900 homes, and 40 megawatts of solar generating capacity, enough to power from 6,000 to 8,000 homes, installed by the end of Patrick’s term.
Globe staff writer Beth Daley contributed to this report. Erin Ailworth can be reached at eailworth@globe.com.

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Posted by skirsner October 21, 2009 05:00 PMOne of the better-connected grapes on my personal grapevine e-mailed me earlier this year to ask: what happened at Progress Software?
Joe Alsop, who started the company in 1981, and served as its CEO for the better part of three decades, had vacated the corner office, and also left the board of directors back in March. He was replaced by Rick Reidy, who’d been the COO.
Progress under Alsop had always been an extremely low-key, marketing-averse company. (Over the years, I’d invited Alsop to participate in a couple panels, and he always refused.) But it seemed strange that no one locally was talking about the transition, given that Progress has a market cap of nearly a billion dollars, and almost 2,000 employees. The Globe ran a tiny news brief, and the Boston Business Journal noted that the CEO switch came at a real low-point for the company, adding that Alsop had received a golden parachute package worth about $5 million.
I dropped in on Rick Reidy, the new CEO at Progress, earlier this month to see what was up. (The pic above shows Progress employees ringing the NASDAQ closing bell last December. Rick Reidy is right between the “S” and “o” in Software. Alsop, interestingly, wasn’t in the picture.)
Progress sells infrastructure technology that you hardly ever see or hear about, but which more than 70 percent of the Fortune 100 rely on when they develop and deploy new software applications. The company’s first product, in the 1980s, enabled software developers to easily create programs that could run on lots of different kinds of computers and operating systems — and that product, OpenEdge, is still about half of the company’s business. “It was sort of like Java before its time,” Reidy says. Lately, the company has made more than a dozen acquisitions, mainly focusing on data integration — basically, getting data that is stored in one form to play nicely with data in a different form.
Reidy was pretty candid about taking over Progress in March, when the company’s stock price was in the dumps, and its net income for Q1 plunged 72 percent. I asked Reidy about the transition.
“I was running our Data Direct division,” he said. “And I really wanted to go off and be a CEO. I went to Joe and gave him a year’s notice that I was planning to leave, and we wound up talking about me being his successor. Last summer [2008], the board met and appointed me COO.” In March, Reidy took on the CEO role. I asked why Alsop didn’t stick around on the board for a while. Since Alsop was the company’s founder, it sounds like there was concern that his presence might detract from Reidy’s authority. “The decision was to cut the cord,” Reidy says. “The message was, there’s a new sheriff in town.”
(Incidentally, Joe’s brother Stewart Alsop has always maintained a much higher profile. A long-time columnist and editor of InfoWorld, he’s now a Silicon Valley venture capitalist — he helped fund TiVo — and blogger.)
Reidy says he’ll continue diversifying the company. He’s also embarking on the first real marketing and communications push they’ve ever done. It’s a campaign called “One Progress.” They’ve hired a chief marketing officer, and are trying to get the sales force to take a more coordinated approach to working with customers (in the past, several Progress salespeople responsible for different product lines might interact with a single customer.)
This week, Reidy is in Brazil speaking to about 500 customers and prospects from across South America. Reidy told me that Progress’ growth this year is primarily in markets like Brazil, India, and China.
The company is aiming to become “more of a full-service IT solutions company,” Reidy says, citing IBM as a role model. And Progress’ stock has rebounded since Reidy took the reins in March.