The eHealth report, Small Business Health Insurance: Costs, Trends and Insights 2017 (PDF) highlights the concerns small business owners have when it comes to the cost of health coverage. Close to 80 percent said they worry about the cost. And 62 percent say a 15 percent increase in premiums would make group health insurance unaffordable.
Affordable Small Business Health Insurance Almost Out of Reach
Compared to individual coverage, small business plan premiums are faring better when it comes to price increases, the report says. While the national average premium coverage for small businesses increased by eight percent between 2016 and 2017, it was at least double that for individuals. Still, any increase will impact how a business budgets its operations.
This is because the margins in which many small businesses operate leave very little room for fluctuations in prices. Thus any increase in a product or service can have a negative impact on overall operations. In most cases, this means making due with less or without and adapting to market conditions. And this is what very small businesses and individuals have done.
In a press release, eHealth CEO Scott Flanders explains what happened as prices for individuals and families continued to rise in 2017. Flanders says, “More owners of very small businesses — of two or three employees — began enrolling in small group health plans. Some never knew they qualified for small business group coverage, but in many cases it offered them more flexibility and lower prices per person than individually purchased health insurance plans.”
The report was compiled by analyzing applications received by eHealth from employer groups in 2017 and a March 2018 survey of small business owners who purchased group health coverage at eHealth. The companies being serveyed had less than 30 employees each.
How are Small Businesses Impacted by the Cost of Health Insurance?
When it comes to their ability to continue paying for their employees’ health insurance, 78 percent of respondents said they were somewhat or very concerned.
As previously mentioned, this affects business decisions. For 30 percent of business owners, it was delaying new hires, while 61 percent said it affected their ability to provide bonuses and offer raises to their employees. But owners are doing all they can to provide for their workers.
At eHealth, 47 percent of small businesses said they currently pay 75-100 percent of their employees’ monthly premiums. And for 6 in 10 of these businesses, health coverage is used to help them hire and retain the best workers.
Policies were also addressed in the report, and small business owners said the repeal of the individual tax penalty in the ACA will not change their strategy. Nearly all or close to 95 percent responded the repeal will not stop them from providing health coverage to their employees.
Why Do Small Businesses Offer Coverage?
The report concluded by asking why small businesses offer healthcare coverage? And the answers are not surprising because they are based on a sense of responsibility or moral obligation (40 percent), providing benefits to their employees (47 percent), and business strategy (64 percent).
You can download the full report here (PDF).
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