Health Insurance Articles

How Health Care Costs Have Affected Small Businesses

2009-08-08

How health care costs affect small business is the topic discussion of many roundtables. As someone who was looking to start a small business, Obama’s plan, which involves plans for healthcare, tax cuts, and the environment, certainly will have an effect (either positively or negatively)on small businesses.

Obama is immovable on his healthcare plan. The effect on small businesses could be of concern to some; especially with the salaries of medical professionals raising so much in recent years. Obama’s goal is to make healthcare more accessible and affordable for everyone. He plans to do this is by lowering the cost that consumer’s pay by an amount over $1,000 on average. Obama places pressure on insurance companies themselves to provide lower-cost insurance to persons.

However, if the insurance companies cannot cooperate, then the discounts may have to be picked up by the employer. Obama plans on making healthcare affordable for everyone, and that definitely includes small business owners.

Small businesses often pay more for employee health benefits because they don't have the buying power of big employers.

USA Today summarized the issue in a page one story:

“Small businesses are driven crazy by soaring employee health costs, an expense that surveys show has become the biggest headache and obstacle to growth. Insurance brokers customize plans for small firms. Insurers cut deals for owners launching on-the-job worker "wellness" programs. Professional employer organizations combine dozens of small firms into big employee groups for discounted rates. And Health Savings Accounts (HSAs) crafted by Congress are now part of small firms' arsenal.

Congress (in March 2006) moved closer than ever to passing health care legislation to let small companies band together across state lines for discounts.

However, it is the smallest of "small employers" that provide coverage least often - 72 percent of those with 10 to 24 employees, and only 47 percent of those with three to nine employees.

For policymakers seeking responses, some of the following resources may be of use. Note that fairly diverse strategies have been tried and proposed.

State COBRA Expansions for Small Businesses in 39 states and DC expand COBRA regulations to small businesses (2-19 employees). The 2009 federal stimulus law expands benefits and offers to new opportunities for state coordination.

These market-based tools are aimed at lowering business health insurance premium costs and requiring increased consumer responsibility. Yet the ‘bare bones’ policies often associated with such plans may leave a family with hefty charges for routine or not-so-routine medical services. This ‘mini-summit’ 2 hour session examined facts, opinions and some unknowns.”