Health insurance reform will bring down costs for small businesses by creating a health insurance exchange, providing a small business tax credit and ending the “hidden tax” on small businesses that provide health insurance, according to a recent report.
"Lower Premiums, Stronger Businesses: How Health Insurance Reform Will Bring Down Costs for Small Businesses," was released by Health and Human Services Secretary Kathleen Sebelius.
“Small businesses drive our economy and create jobs, but they are struggling as healthcare costs continue to rise,” Sebelius said. “The high cost of care is making it difficult or impossible for these businesses to offer care or grow their business. Health insurance reform will bring costs down and give small businesses the relief they need.”
According to the report, small businesses, considered the “backbone of job creation in our economy," are disproportionately burdened by the financial strains caused by rising healthcare costs. On average, small businesses pay up to 18 percent more than large firms for the same health insurance policy. This difference is due in part to high broker fees (which can be up to 10 percent of premiums) and health plan administrative costs that are three times those in the large group market.
According to the report:
- Nearly three-quarters of small businesses that did not offer benefits cited high premiums as the reason.
- Almost half of workers employed in a small business have insurance that limits the total amount the plan will pay for medical care, and nearly one in 10 small business workers have a health plan that does not offer prescription drug coverage.
- Workers in small firms are more likely to shoulder out-of-pocket healthcare costs – 36 percent spent more than 10 percent of their household income on out-of-pocket medical expenses in 2007, compared with 27 percent of workers in larger firms.