Many Small Businesses Dissatisfied with Costs of Insurance, Likely To Increase Employee Cost-Sharing, Study Says

Many small business employees will likely have to cover a larger share of the cost of their employee-sponsored health plans next year and may receive fewer benefits "if health insurance costs continue to escalate," according to a study released April 2 (Pallarito, Reuters Health, 4/2). Kaiser Family Foundation researchers designed and analyzed the survey, which was administered to 805 owners and executives of U.S. for-profit companies and not-for-profit organizations with three to 24 employees by researchers from Princeton University's Survey Research Center . The study, the "National Survey of Small Businesses," found that 67% of small business executives report "they are very or somewhat dissatisfied" with the cost of health care and health insurance. In addition, 35% of small businesses that offer health coverage may require employees to cover more of the cost in the next year. The study found that about 60% of small businesses provided health insurance for employees in 2001, although 71% offered employees only one health plan. The study also found that 28% of small businesses that provided health insurance for employees in 2001 had switched health plans in the past two years, with cost cited as the "most important reason." In addition, 72% of small businesses that did not offer health insurance for employees cited cost as a "very important reason." According to the study, a 10% increase in health insurance costs would likely prompt 36% of small businesses to reduce health benefits for employees and 17% to drop coverage, while a 25% increase in costs would likely prompt 48% to reduce health benefits and 27% to drop coverage ("National Survey of Small Businesses" Highlights, April 2002). "What this suggests is (that) cost issues are driving employers to 'turn' their health coverage, leading to instability (of health insurance coverage) for their workers," KFF Vice President Larry Levitt said, adding, "Workers can expect to pay more for health insurance and in many cases have less benefits" next year. They could also lose their health coverage in some cases, he said (Reuters Health, 4/2).

Health Policy Proposals
The study found that 89% of small business executives support proposals that would provide employers with tax credits to help cover the cost of health insurance for employees, and 75% back proposals that would provide employees with tax credits to help cover the cost of individual health insurance. Two-thirds of small business executives said that they favored proposals to expand public programs to provide health insurance for low-income individuals, and 54% support proposals to expand Medicare to cover the uninsured, the study found ("National Survey of Small Businesses" Highlights, April 2002). The study, highlights and charts are available online.