Small businesses suffering under the current healthcare system

While large firms (those with 200 or more employees) unanimously provide health benefits to employees, not so for smaller companies. The reason is cost. As a result, it is time for small firms to add their voice to change the system.

According to the annual Kaiser Health Survey for 2007 (available at Kaiser Family Foundation) 99% of large firms provide coverage, and of those 95% cover at least 50% of the premium cost for families. With small firms (3-199 employees) coverage is provided by only 59% of the firms, and for those that do provide coverage they only cover 63% of premiums. Why is this discrepancy happening?? Cost increases are the obvious reason. From the Kaiser Survey we see that since the Spring of 2000 health premiums have risen more than 80% in total, or more than 10% annually, well out-pacing inflation and employee earnings.

What is this doing to small businesses? It is forcing them to drop coverage in increasing numbers. It is also pushing creative solutions including funding health costs outside of traditional programs. In many cases employees are forced into individual high deductible plans, which are fine for healthy consumers, but devastating for health challenged workers. In either event, these issues help make these firms look unattractive to new workers when compared to larger firms.

Would a national health plan fix this discrepancy, yes, but only if the overall costs per capita are the same or lower. More study is needed, but it looks like small businesses should be looking for a change in policy compared to their larger competitors.

As I have argued before, we cannot keep paying the increasing costs of the broken US health care system, and we can now see that it's finally time for small companies break with the US Chamber of Commerce, which advocates augmenting the current system, and add their voice to the Physicians for a National Health Program.