Hope for small business health insurance.

• Author: Eulberg, Tyera

For the first time in nine years, Colorado has enacted legislation to address small-business health insurance, hoping to control exploding premiums and the rapidly declining number of employees covered. But is it enough?

Even big businesses use the word "crisis" to describe the health-care and health insurance environments ill Colorado.

For the past four years, corporate giant Qwest Communications International has seen health insurance premiums increase at unprecedented rates. So much so that the company has set caps on future premium spending, asking its 50,000 employees to pick up the cost of insurance premiums that rise higher than the cap.

When Scott Elmore, owner of Stan's Automotive in Louisville, hears that, he chuckles dryly.

Elmore's business's health-insurance premiums have nearly doubled over the past four years. And Elmore's employees have always paid 25 percent of their premium.

That's because Elmore, instead of employing and insuring 50,000, employs and insures only 12.

Like many other business owners, Elmore is a victim of recent health-care inflation that seems to target small business. While average business health insurance rates increased an already substantial 15 percent last year, for the vast majority of companies with fewer than 100 employees, the hike was at least 20 percent, and often much more.

Elmore's 37 percent increase seems paltry compared to Denver Bookbinding Co.'s 75 percent. In fact, the only way Denver Bookbinding owner Gail Lindley could continue to offer insurance at all was by passing an enormous deductible on to her employees--the highest allowed, she said.

But many small businesses have been forced to stop health coverage altogether. According to the National Bureau of Economic Research, the number of employees covered drops a full percentage point for every 3 percent premium increase. The Agency for Healthcare Research and Quality reports that this year less than half of businesses with 10 to 24 employees are able to offer health insurance; among those with fewer than 10, coverage is available to an even more dismal 36 percent.

The root of the problem is threefold. Small businesses lack the purchasing power of national corporations with thousands of employees--revenue from small accounts simply doesn't make up for the insurer's administrative investment, leaving many providers reluctant to cover companies with fewer than 100 employees at all, let alone compete for their business. Small companies...