'Tis the Season . . . or, Insurance Woes

In my short tenure with CMCA, I've already found a least favorite recurring task. Each year around the end of November our insurance broker starts calling to set up a working lunch to look at our health insurance benefits. You'd think a free lunch would make any task more appealing but honestly I'm starting to dread the process. After some small talk our broker gives us the good news and the bad news. I always choose bad news first to get it over with. In each of the three times I've been involved, the news is always that it costs more to insure CMCA employees than we pay in premiums. In other words, our premium is going to go up. "So what's the good news?" I ask. "I think we can limit the increase." I whistle in mock pleasure. Within a couple of months of starting at CMCA he told me we were looking at a 47% increase! Anything less, I suppose, is icing. That time we had to switch companies to get a less painful increase. Even more scary, fewer and fewer companies are even interested in bidding on us. Our primarily-female business model, it seems, is prone to common female health conditions like pregnancy that make us expensive to insure. Further, the insurance/health industry seems to be getting screwier and screwier as rates across the country average about a 14% increase. I don't know how a nonprofit, much less a for-profit, can continue to absorb these kinds of costs. Our options include raising prices on our products (if we had a product), decreasing the quality of the benefit, or sharing part of the premium costs with our employees. So far we have chosen to continue paying 100% of employee premiums but that leaves us with the option to decrease the quality of benefit. Two years ago we were able to maintain essentially the same level of benefit by switching to Mercy Healthcare. They have been really good to work with and have offered very competitive options again this year. So we settled on roughly a 6% increase on our premium with slightly less coverage. Starting on January 1 we'll have to pay slightly more for some kinds of office visits, slightly more for some co-pays on prescription drugs and certain kinds of services, and have a slightly higher out-of-pocket maximum. Overall, I feel like we slid by with a relatively painless option for 2008. CMCA will pay thousands more for insurance this year but our employees will basically see the same level of service. But what about next year? Costs will continue to go up and we don't anticipate any meaningful increase in our federal funding. We're certainly exploring other ways to generate revenue but we also need to be thinking about cutting costs. Any guesses as to what the most effective way to decrease our health insurance cost is?

I'll talk about WELLNESS next time.

Houses for Sale!

It's a drag owning empty, never-lived-in homes . . . for four years. But that's what we've got at CMCA. For the record though, one of them is finally under contract. We're working to find a mortgage lender willing to take a little risk with our buyer (and who understands this kind of funding arrangement) but it's looking like we're going to get this one out from under our belt. As a community housing development organization, or CHDO, we get some funds from the City to help finance the construction of these homes and to help provide some down payment assistance. Even with that though, we can't just give them away. Being non-profit doesn't mean we don't worry about money. Generally when we build a home we like to make enough profit (about 10%) that we can start building another one. Non-profit DOES mean that we're not lining our pockets with income generated from home sales. :) That's one way the city supports affordable housing development. Fund one and start a chain reaction of new, affordable home development. Break that chain, though, and you've got a problem. Welcome to CMCA. With the best of intentions, homes were built in neighborhoods that may not support their sale, for a variety of reasons. Then, the agency (formerly known as CMCHDC) goes through massive upheaval to address some management issues and comes out of it with 75% of it's top managers replaced over a three year period. Unfortunately, that meant that those houses were not the top priority, survival and then revival were top on our minds. That's not to say houses elsewhere weren't moving. We sold four houses in Fulton during that time for example (where management did not change, and in an area with little crime and other new houses nearby). Anyway, we're stable again and trying to get back to the high ideals we have for ourselves and our communities. We just completed another new home on Haden drive (in partnership with Youthbuild) on a street just north of Vandiver Dr. that is lined with beautiful Habit for Humanity built homes. This one will go fast, and so will the one we'll start building next to it in the spring. In the meantime, we're listing our other central city house with a realtor and asking just enough to break even. If you know anyone on the market, give them my name.

Affordable Housing

I used to think that owning a home was one of the most critical steps towards becoming self-reliant. But now I qualify that by thinking about affordable housing with reasonable, stable financing is pretty critical too. There was a story in the Saturday Columbia Tribune featuring two homes CMCA has owned for some time and a discussion with Dianna Moore, Economic Development Director, and the CEO of the Columbia Housing Authority, Phil Steinhaus. Insufficient income and bad credit make owning a home particularly difficult. Add to that some unscrupulous banking practices like those highlighted in another story in the Tribune and you've got a recipe for disaster. For families that are right on the edge of having the capacity to purchase, a risky loan with wildly varying interest rates on too much home can mean trouble down the road. The other story focused on a couple being lured in to buying more house than they can afford by the mortgage lenders. The conventional wisdom about "buy as much as you can afford" doesn't seem to hold true anymore. Our homes are available for those making up to 80% of median income (roughly $20,000 more than the federal poverty level) and they come with downpayment assistance. As critical as homeownership is to getting out of poverty and staying out, we've got to make sure we aren't pushing families too quickly or getting them into financial arrangements that will be difficult for them in the future. I heard on NPR that interest rates can jump as much as 10%-15% depending on the kind of adjustable mortgage agreement in place. That kind of bump could send at-risk families over the edge, cause them to lose their home, ruin their credit and put them in a worse situation than when they started. Obviously we don't want to do that.