Health Insurance Cost, Access a Top Concern for Small Businesses

Health coverage access and affordability is a major concern to small business owners, and the community is "leveraging its voice in the economic stimulus debate to focus" on overhauling the U.S. health care system, the Washington Post's "Small Business on washingtonpost.com" reports.

A recent survey by the Entrepreneurs' Organization of its 7,000 members found that more than 70% of respondents were concerned about the rising cost of providing health care in 2009. EO Global Board of Directors Chair Dave Galbenski said, "Health care and access to credit are issues that have been on the radar screen for our members for years." He added that during an economic recession it is not surprising that health care is at the top of the list of concerns for business owners because it is a "key cost" for businesses.

Health care premiums for small businesses on average are 18% higher than those of large businesses, according to the National Federation of Independent Business. According to business simulations conducted by NFIB, if the federal government required employers to offer employees coverage beginning in 2009 and mandated that they cover at least 50% of the cost, more than 1.6 million jobs would be lost between 2009 and 2013, with small businesses accounting for more than one million of all jobs lost, or about 66%.

CHOICE Act
At a recent House Small Business Committee hearing, committee chair Nydia Velazquez (D-N.Y.) reintroduced the CHOICE Act, which would allow businesses to obtain health insurance at negotiated bulk rates through purchasing pools and would allow small businesses that offer coverage a refundable tax credit of 65%. The committee said that although nearly all large employers offer health coverage to their employees, just 36% of small businesses with 10 or fewer employees do because of high administrative costs and higher premiums.

During the hearing, Michael Beene, a senior health adviser for the National Association for the Self-Employed, said that small businesses are spending a median of 5.5% of their sales on health insurance benefits, a 48.6% increase since 2005. He said, "With such a large percentage of revenues going to health coverage, we can see why this expenditure is one of the first to be decreased or cut when business owners are faced with hard economic times" (McLoone, "Small Business on washingtonpost.com," Washington Post, 2/10).