Health Insurance Crisis Threatens Small Businesses.Legislation Creating Bigger Pools Of Employees Is Best Option

• Author: Olympia J. Snowe
• Position: U.S. Senator
• Pages: 02

Olympia J. Snowe, Chair of the Senate Committee on Small Business and Entrepreneurship, is Maine's senior Senator, and is currently serving her second term in the US Senate.

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ces to provide health coverage for their employees. The costs for providing health benefits are skyrocketing for everyone, and are going up even more quickly for small business. For 2003, health insurance premiums for small businesses went up an average of 13.9 percent, on top of a 12.7 percent increase the year before. This was the third straight year of such a double digit increase. Costs for employers with between three and nine employees went up 16.6 percent, and I have heard directly from small businesses whose premiums were increased 30 percent, 40 percent, and even 50 percent! Moreover, 24 percent of all firms employing between three and 199 workers were forced to increase employee deductibles in 2002, according to the Kaiser Family Foundation poll. For millions of Americans, any raises they received in 2002 were overwhelmed by higher health care costs, leaving them unable to increase their standard of living.

And the smaller the business, the heavier the cost burden, if health insurance is even an option. For businesses with fewer than 10 workers, the employer and employees together pay, on average, about 8 percent more in premiums than the amount paid by larger companies. This crisis only grows as the business gets smaller. In businesses with fewer than 50 employees, just 47 percent currently provide any health insurance benefits, and the Department of Labor (DOL) has reported that only 24 percent of small businesses that employ "low-wage" workers offer health plans. In all, 84 percent of small firms in a recent survey conducted by the Kaiser Family Foundation said that high premiums and inability to qualify for group rates were among the primary reasons they do not offer their employees health benefits. If we can do more to help small businesses cope with that burden, and provide health care for their employees, we will make significant progress in our efforts to reduce the ranks of the uninsured in this country. And as we reduce the number of uninsured, we can improvePage 4 the quality of the small business workforce. During my meetings with small business owners, many have told me that when they hire employees, the first thing new hires ask about is the health insurance package. Often, employees are even willing to take less in salary if they...