Small Business Health Insurance
|April 21 2009|
Small business employees are much less likely to have access to employer-sponsored health coverage than the employees of larger firms. According to the Kaiser Family Foundation:
Undoubtedly there are many reasons why small businesses are less apt to offer health coverage to their workers than larger firms. However, one likely reason is that small businesses encounter a host of costly state regulations and mandated-benefit laws not faced by larger employers that self-insure.
Small Businesses Face Higher Costs. Since 1999, the cost of employer-provided health insurance has risen 120 percent, or four times faster than prices generally, according to the 2008 Kaiser Family Foundation Employee Health Benefits Survey. The Commonwealth Fund estimates that small businesses face higher than average costs:
Continuing medical cost inflation only exacerbates the problems faced by small businesses. Health care costs are expected to rise 10 percent in 2009, according to the consulting firm Pricewaterhouse Coopers.
Why Costs Are Higher for Small Businesses. Costs are higher for small-group insurance because states require small-group health policies to cover certain conditions, treatments and providers. Large employers often self-insure. Their plans are governed by federal law rather than state regulations, and federal government mandates fewer benefits. Small group premiums vary widely by state, and the highest premiums are in the most heavily regulated states.
According to the Council on Affordable Health Insurance, there are more than 1,961 state-mandated benefits that insurance companies are required to offer in their health plans, adding to the cost of small group health insurance.
In Massachusetts, the Division of Health Care Finance and Policy reported that 13 cents of every dollar spent on health care goes to cover mandated benefits. CAHI estimates that these mandates add 20 to 50 percent more to the cost of insurance, depending on the state. ...
You can download Small Business Health Insurance in PDF format.
Brief Analysis No. 642
NATIONAL CENTER FOR POLICY ANALYSIS
People should be able to purchase, with pretax dollars, health plans that are portable from one job to the next, just as group plans do. Employers should be able to help pay the premiums on those individual plans.
To avoid costly state mandates, small businesses should be allowed to purchase plans similar to those purchased by large companies that self-insure. If sections of ERISA are rewritten or association health plans allowed, small businesses could create a national marketplace where insurance companies and care providers compete for individuals on price and quality.
The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983.
The NCPA's goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector. Topics include reforms in health care, taxes, Social Security, welfare, criminal justice, education and environmental regulation.
|Last Updated ( April 21 2009 )|
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