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Small Businesses Carry the Burden of Rising Health Care Costs

If you are a small business owner struggling to provide health coverage, it is important for you to know you are not alone. Small businesses across the country are struggling as the cost of health care continues to skyrocket. Americans who build and run the millions of small companies around this country have seen insurance costs consume a greater share of their payroll. High costs are making it impossible for many small businesses to provide insurance to their employees.

Here are some of the facts:

  • Cost is the Barrier:  The driving force behind the erosion of health coverage among small businesses is cost. In one national survey, nearly three-quarters of small businesses that did not offer benefits cited high premiums as the reason. One reason small businesses feel this pinch is that they pay more on average for administrative services such as marketing, enrollment, and premium collection.
  • Disrupts and Diminishes Coverage:  In the past two years, more than half of small businesses that offered coverage reported switching to plans with higher out-of-pocket costs in response to rising premiums. Another third switched to a plan that covered fewer services, and 12% dropped coverage entirely.
  • Drain on Payroll:  Among small businesses that offer coverage, 40% report spending more than 10% of their payroll on health care costs.
  • Limits Business Growth:  Forty percent of small businesses said that health costs have had a negative impact on other parts of their business (for example, contributing to high employee turnover or preventing business growth).

Nearly half of small business owners in a recent survey said that ‘making health care more affordable’ is the idea Washington should address first. The National Small Business Association adds, “…relief from escalating health insurance premiums… can only be achieved through a broad reform of the health care system with a goal of universal coverage, focus on individual responsibility and empowerment, the creation of the right market-based incentives, and a relentless focus on improving quality.”

Source:  www.HealthReform.gov  – An official U.S. Government website managed by the U.S. Department of Health & Human Services.

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