On March 14, 2007, NFIB President Todd Stottlemyer testified before the U.S. House Committee on Small Business to address the challenges facing small businesses trying to gain access to affordable health insurance – the No. 1 issue facing small-business owners.
Finding affordable and quality health care options is not a new problem for small businesses.
- Small business represents the largest portion of the uninsured population (about 27 million), and action is necessary now to avoid further growth of the uninsured population.
- The small-business community pays, on average, 18 percent more in health insurance premiums for the same benefits as those in the largest firms.
Stottlemyer highlighted the four core problems in the small-group health insurance market:
- Lack of competition – a 2005 study found that:
In a typical state, the largest insurer covered 43 percent of the small-group market. In 9 states, Blue Cross Blue Shield covered more than 50 percent of the small-group market. In North Dakota, Blue Cross Blue Shield covered over 90 percent of the small-group market. - Lack of bargaining power
Due to their size, small businesses cannot spread their risk across a large number of workers, thus their bargaining clout is significantly reduced, resulting in higher prices for insurance. - Administrative inefficiencies
About 20 to 25 percent of a small business employer’s health insurance premiums cover administrative costs. Similar administrative costs for large employers average much less, about 10 percent. - Expensive mandates
There are more than 1,800 state health insurance mandates. Most small businesses are required to comply with all state mandates, which significantly increase insurance cost.
NFIB supports a comprehensive approach to helping small business find affordable and quality health insurance. NFIB’s approach has three specific steps:
- Pooling
Increasing the size of the pool will help increase bargaining power and decrease administrative costs, which will increase coverage. - Tax-based incentives
Currently, employers can fully deduct from their taxes the cost of purchasing health care for their employees. Likewise, employees enjoy the benefit of excluding the cost of their health care from their taxable income. Unfortunately, those who cannot obtain coverage from an employer don’t enjoy the same tax benefits. NFIB supports tax-based incentives that encourage fairness and equality for everyone purchasing health insurance. - Cost containment measures
- Increased transparency, improving health information technology (IT) and limiting mandates are three essential components of containing costs.
- Curbing the growth of mandates
In his testimony, Stottlemyer stressed that when looking at the value of mandates there is a difference between what people want and what they need. He noted that there is a difference between the value of a woman’s access to a mammogram versus everyone having access to hair transplants.
NFIB pledges to do all that it can and to work with Congress to find real solutions to this problem. In the testimony, NFIB called on Congress to take action now to address the insurance crisis facing America’s small businesses.
