Small Businesses, Under Increased Pressure, Deepening Cuts to Health Coverage

The New York Times on Tuesday examined how the recession has "accelerated the pressure on small-business owners to pinch every penny, and many feel they have few options but to go after employee health coverage." According to the Times, "Even before the recession, owners of the smallest businesses had struggled to absorb the inexorable annual rise in health premiums."

The Times reports, "Surveys suggest that rising premiums have prompted more than half of small businesses to reduce benefits, raise deductibles or require workers to shoulder a larger share of an ever more expensive pie." The number of companies with fewer than 10 workers that offer health insurance has declined by 16% since 2001, with 49% of the smallest companies now offering benefits, according to a survey released by the Kaiser Family Foundation and the Health Research and Education Trust. In addition, employees of firms with fewer than 25 workers are now twice as likely to be without health insurance compared with workers in larger companies, according to the Employee Benefits Research Institute. Among small-business employees who do have health coverage, the number with high deductibles has more than doubled in the past two years, according to the Times.

According to the Times, several states have introduced programs "to lighten the health care burden on small businesses through tax credits, pooling mechanisms and insurance regulation." In addition, President Obama during his campaign advocated for federal tax credits to help small business provide health coverage. Obama also said he would consider taxing "all but the smallest businesses" if they did not contribute to their workers' health coverage, according to the Times (Sack, New York Times, 2/3).