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CCH® BENEFITS — 11/05/09

Small Business Employees Are 50% More Likely To Lose Health Care Coverage

From Spencer’s Benefits Reports: Employees of small businesses are 50% more likely to lose coverage as workers at large businesses, according to a recent report released jointly by the Department of Health and Human Services (HHS) and the Small Business Administration (SBA). In addition, the report, Insurance at Risk: Small Business Employees Risk Losing Coverage, found that half of workers in small firms that do not offer health benefits remain uninsured.

“More Americans who work for a small business have lost their health insurance coverage, and those who still have coverage have seen their costs go up,” said HHS Secretary Kathleen Sebelius. “Health insurance reform will drive costs down and make it easier for small business owners to give their employees the quality coverage they need.”

The survey also found the following:

• Fewer small businesses are providing coverage to their employees. In 2000, 57% of firms employing less than ten workers provided coverage. In 2009, only 46% of these firms provided coverage.
• Nearly one-fourth of the uninsured — 11 million people — are employees of firms with fewer than 25 workers, even though they only make up approximately one-tenth of the non-elderly population.
• Almost three-fourths of small businesses that did not offer benefits cited high premiums as the reason, and on average, small businesses pay up to 18% more than large firms for the same health coverage.

Insurance Exchanges And Small Firms

On October 20, Linda Blumberg, senior fellow with The Urban Institute, testified to the House Committee on Energy and Commerce’s subcommittee on oversight and investigations about the national insurance exchange provision located in H.R. 3200, America’s Affordable Health Choices Act. She stated that a national health insurance exchange would provide “significant assistance related to health insurance coverage for small employers and their workers.”

H.R. 3200 would allow firms with fewer than ten workers to buy coverage in the exchange in the first year, and would expand to businesses with up to 20 workers in the second year. The Senate Finance Committee’s proposal would allow businesses with up to 100 employees to enter into a health insurance exchange. The Finance Committee bill also would provide a $23 billion small business tax credit to encourage small businesses to participate in the exchange.

According to Ms. Blumberg, a national health insurance exchange would provide an organized marketplace for small employers to purchase health insurance. “Not only would workers in small firms have a choice of insurance plans — a situation extremely unusual for small groups today — but those that have been priced out of the market due to health issues or an older work force in the past may have affordable access to coverage for the first time,” said Ms. Blumberg. In addition, a health insurance exchange would help decrease premiums by sharing risk with a greater pool of people and by decreasing administrative costs.

For more information on the HHS and SBA report, visit http://www.healthreform.gov/reports/smallbusiness/index.html. For a copy of Ms. Blumberg’s testimony, visit http://www.urban.org/UploadedPDF/901290_limited_options_coverage.pdf.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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