Fewer businesses provide health insurance
For small businesses, it's gone from bad to worse
Employee health insurance is on the decline, and for small businesses, it's gone from bad to worse.
The share of small companies providing insurance plummeted from 47 percent to 38 percent between the years 2000 and 2011, according to a report from the Robert Wood Johnson Foundation.
The proportion of all companies offering insurance slid from 59 percent to 52 percent.
Annual premiums paid by individuals doubled from $2,490 to $5,081, while family premiums rose even more, from $6,415 to $14,447.
As a result, fewer companies are offering health insurance, and fewer employees are taking it.
The Robert Wood Johnson Foundation defined a small business along new health reform guidelines: those with fewer than 50 employees. The organization is a long-time supporter of health care reform.
"Small businesses just have so many pressures," said John Lumpkin, the foundation's senior vice president. "When they're facing these economic crunches, one of the things they have to cut to survive is health insurance."
Tiny companies have a harder time dealing with rising insurance costs for two reasons. These firms typically have smaller profit margins. Additionally, insurance companies charge them higher rates. That's because insurers view each company as a separate pool of risk, and smaller companies have fewer employees to spread out that risk.
"You're not going to get the same discount as a large business," Lumpkin explained. "In the insurance market, the number of people that you have determines your leverage."
In total, 11 million people lost insurance during an 11-year period. The number of people whose work provided insurance dropped from 170 million to 159 million.
Will the Affordable Care Act halt the rise in premiums? No one knows yet. But there are two prevailing theories.
The ACA forces insurance companies to provide coverage to all, including those with pre-existing conditions and dangerous habits, such as smoking. Critics fear that will drive up premiums.
However, the ACA's individual mandate also forces everyone to buy insurance or face penalties, which spreads out risks and costs. Supporters think that will make insurance cheaper.
What is clear is that some health reform measures are already facing setbacks. The Small Business Health Options Program is supposed to let business owners choose a level of coverage and have their workers pick among competing plans that qualify. However, regulators have recently proposed changes that could cause small businesses to avoid ACA exchanges.
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