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Small businesses are facing a substantial affordability crisis in providing health insurance for their employees, according to a survey conducted by the National Federation of Independent Business
Most small business owners find it challenging to manage the cost of offering employer-sponsored health insurance and almost half have taken a lower profit or suffered a loss to pay for health insurance premium increases over the last five years.
“Health insurance has been a continuous challenge for small business owners,” said Holly Wade, executive director of NFIB’s Research Center, in a statement. “The cost of health insurance is by far the biggest challenge for employers who offer health insurance and for those who do not offer it. Small employers compete for talent in filling open positions and are aware that health insurance is an important benefit for many employees and job seekers.”
In the Texas Legislature this session are bills proposing legislation to create more affordable health coverage options.
House Bill 1001 and Senate Bill 605, filed by Rep. Giovanni Capriglione (R-Southlake) and Sen. Drew Springer (R-Muenster) have filed bills that would allow employers to buy "mandate-lite" coverage as a more affordable option through so-called "consumer choice plans."
In addition to the NFIB, the Texas Association of Business is also in support of the bill. The TAB asserts that Texas has more mandates and regulations above the federal Affordable Care Act, aka Obamacare, than most other states, making it more difficult for businesses to provide affordable coverage for employees. Most large employers aren't subject to state regulation because they self-fund health coverage, allowing them to provide more innovative coverage that is more affordable, according to the TAB.
"Consumer choice plans create the same opportunity for small businesses to offer affordable coverage that large employers are able to offer," said Glenn Hamer of the TAB, writing in the Dallas Morning News.
Ninety-four percent of small employers find it challenging to some degree for their business to manage the cost of offering employer-sponsored health insurance, according to the NFIB survey. Forty-eight percent reported it being very challenging, 34% reported it as moderately challenging, and 12% reported it as mildly challenging.
Almost half (49%) of small employers have taken a lower profit or suffered a loss to pay for health insurance premium increases over the last five years. Forty-six percent of small employers have raised prices and another 36% have become more productive and efficient.
While cost is the most reported reason for not offering health insurance, cost is also a critical problem for those that do offer it. Almost all (98%) of small employers offering health insurance are concerned that the cost of providing health insurance to their employees will become unsustainable in the next 5-10 years.
“Although job creators see the value in providing health insurance to their employees, to do so, nearly half of small employers have suffered a loss or taken less in profit in the past five years. Here in Texas, we have an overregulation problem,” said Annie Spilman, NFIB state director. “Thankfully, the Legislature is considering two bills that would create mandate-lite coverage — plans that would provide all the protections of insurance but are exempt from mandates that go beyond the federal scope. We look forward to working with lawmakers for a healthier Texas and a healthier business environment here in our state.”
More than half (56%) of small employers reported that they currently offer health insurance to employees and 44% percent do not. Businesses with more employees were far more likely to offer health insurance with 89% of firms with 30 or more employees currently offering health insurance compared to 39% of those with 1-9 employees.
Of those currently offering health insurance, close to all (93%) offer group health insurance.
Of those employers offering health insurance, 37% had most of their employees covered by a high deductible PPO plan. A quarter had most of their employees covered by an HMO and another 9% by a Point of Service plan.
Eighty percent of firms offering health insurance do not offer a second type of health plan.
When asked whether their group health plan is fully insured or self ensured, a little over three-quarters (77%) of small employers reported a fully insured plan.
Sixty-five percent of small employers reported the most important reason they don’t offer health insurance is that it’s too expensive. Firms with 30 or more employees overwhelmingly (88%) reported this as the most important reason they do not offer health insurance, compared to firms with 1-9 employees (63%) and 10-29 employees (70%).
Nine percent of all firms reported that the most important reason they do not offer health insurance is because their employees have access to low-cost coverage in the government exchange marketplace or other government programs.
Seven percent reported that many employees are part-time, seasonal, or have high turnover. Two percent do not offer health insurance because revenue is too uncertain and another 1% said the administrative hassle is too great.
Read the full report here.