09/21/2005
After years of hearing only bad news about health insurance, America’s small-business owners need some good news. But last week, they learned that things are still bad, just not as bad as they have been. 
A study released by the Kaiser Family Foundation did contain a bit of good news--health insurance premiums for businesses increased an average of 9.2 percent this year. That’s good news only because the average premium costs last year were two points higher. It’s certainly a welcome change that ends four consecutive years of double-digit hikes. But the study confirmed once again that the nation’s health care foundation is rapidly crumbling.
The worst news, but no surprise, was that the percentage of businesses offering health insurance to employees has declined steadily over the past five years, as the cost of coverage continues to outpace the growth of wages and inflation.
Now, only 60 percent of the companies provide health coverage to their workers, a sharp drop from 69 percent five years ago. The decline is centered mainly in the small-business sector. Nearly all businesses that have 200 or more employees offer health benefits.
There is no greater concern among small businesses than the rising cost of health insurance. The most recent National Federation of Independent Business “Small-Business Problems and Priorities” survey reported that two-thirds, 66 percent, of small-business owners again named the issue as their single most important problem--up significantly from 47 percent four years earlier.
Other bad news in the Kaiser survey: annual premiums for family coverage spiked to $10,880 in 2005, surpassing the gross earnings for a full-time, minimum-wage worker. The average employee, the survey said, paid more than $2,700 toward family health insurance premiums this year, more than one-fourth of the total bill.
Cost was cited as the primary factor discouraging businesses, the majority of which are small, from offering health benefits. Nearly three-fourths, 73 percent, blamed high premium costs for their decision.
For years, small-business owners have been pleading for help. They have little buying power and few affordable options; five or fewer insurers control most of the small-group market. This lack of competition is the reason small businesses get hit with steady rate increases that directly result in more uninsured employees.
There is a solution. The U.S. Senate must pass legislation authorizing Small-Business Health Plans to allow small firms to join together through bona fide trade and professional associations to purchase affordable health insurance. The U.S. House of Representatives has passed this legislation numerous times in past congressional sessions and did so again this summer by passing H.R. 525 with bipartisan support. But the Senate has yet to act.
By creating Small-Business Health Plans, Congress could help small employers gain greater bargaining power, economies of scale and administrative efficiencies while bringing fairness to the health care arena. That would mean small-business owners and their employees could enjoy the same bargaining advantages as Fortune 500 companies and labor unions when shopping for health insurance--and that would be good news.
Jack Faris is the president of the National Federation of Independent Business, the nation’s largest small-business advocacy group. A non-profit, non-partisan organization founded in 1943, NFIB represents the consensus views of its 600,000 members in Washington, D.C., and all 50 state capitals. More information is available on-line at www.NFIB.org.
