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Small Business and The Cost of Health Insurance

Author: Caitlin M Date: April 29, 2013

Health insurance products are as varied as those individuals and employers purchasing the insurance plan themselves. While seeking to expand coverage for small employers, it's critical to understand who offers health insurance, what small employers spend and the value of services that are purchased. Available data shows that:

 
Health Insurance Basics
  • About 175 million non-elderly people are enrolled in a private health insurance plan.1
  • About 156 million non-elderly people are enrolled in an employer-sponsored health insurance plan.2
  • About 19 million non-elderly people are enrolled in a private health insurance plan purchased in the individual market.3
 
Health Insurance Offer Rates by Small Employers
  • Thirty-three (33) percent of small employers with less than 25 employees offer health insurance.4
  • Thirty-six (36) percent of small firms with less than 50 employees offer health insurance.5
  • Sixty-four (64) percent of small firms with less than 50 employees do not offer health insurance.6
  • Cost is a major reason for 65 percent of small employers not offering health insurance.7
 
Health Insurance Costs for Small Employers
  • Since 2002, the average annual family premium for covered employees in small firms increased 96 percent. Family coverage insurance premiums for small firms increased from $7,781 in 2002 to 15,253 in 2012.8
  • Small businesses, on average, pay about 18 percent more for health insurance than their larger counterparts for the same group of services.9
 
Shopped for Health Insurance
  • Eighty-seven (87) percent of small employers who offer health insurance or shopped for health insurance in the last three years discussed their options with an insurance agent or broker.10
 
Fully Funded Health Insurance Plans
  • Eight-seven (87) percent of offering small firms with less than 100 employees purchase health insurance in the fully insured market.11
  • About 2.1 million businesses only offer fully insured health plans to their employees.12
  • About 1.7 million small businesses with less than 100 employees only offer fully insured health plans to their employees.13
  • About 12 million employees who work for small businesses with less than 100 employees are enrolled in a fully funded employer-sponsored health insurance plan.14
  • About 23 million employees are enrolled in fully funded employer-sponsored health insurance plan.15
  • About 8 million people who are self-employed or work for a business with less than 100 employees are enrolled in a health insurance plan purchased in the individual market.16
 
1 EBRI Databook, 2010.
2 Ibid.
3 Ibid.
4 Agency for Healthcare Research and Quality, Center for
Financing, Access and Cost Trends. 2011 Medical Expenditure
Panel Survey-Insurance Component.
5 Ibid.
6 Ibid.
7 Morrisey, Michael A., NFIB Small Business Poll series, Health
Insurance, Volume 3, Issue 4, 2003.
8 Kaiser/HRET Survey of Employer-Sponsored Health Benefits,
2012.
9 Commonwealth Fund, Benefit and Premiums in Job-Based
Insurance, May 2006.
10 Dennis, William J., Purchasing Health Insurance, NFIB National
Small Business Poll series, Volume 7, Issue 3, 2007.
11 Agency for Healthcare Research and Quality, Center for
Financing, Access and Cost Trends. 2011 Medical Expenditure
Panel Survey-Insurance Component.
12 Ibid.
13 Ibid.
14 Ibid.
15 Ibid.
16 EBRI Databook, 2010.

 

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