Fewer small businesses offer health insurance
Friday, June 6th, 2008
Even though the cost of coverage of health insurance by employers is only 6.1%, still the percentage of U.S. small businesses who cover their employees with health insurance coninue to decline this year. This is according to an annual survey conducted by Mercer, a global consulting firm for a sample of 3,000 employers who participated in the survey.
Only 61% of employers with less than 200 employees offered health coverage this year. In 2006, it was 63%, in 2002, 66% of small employers provided health insurance.
This is the third year in a row of moderate increases in health insurance costs, that followed years of double-digit percentage increases. Costs in 2008 are expected to grow even less, but it is expected that they will remain twice as high as the inflation rate.
Both large and small employers who offer health insurance have shifted more of the cost to their employees through higher deductibles.
Large employers in particular are using health management programs as a way to control costs, Mercer found.
Growth in consumer-directed health plans (CDHPs), which cost less than other types of health insurance, also helped curb overall health costs, according to Mercer. The percentage of covered employees enrolled in either a health savings account (HSA) or a health reimbursement account (HRA) rose from 3 percent in 2006 to 5 percent this year.
“As employees shift from more expensive plans into less expensive ones, employers’ overall cost per employee drops,” said Blaine Bos, a Mercer partner.
Consumer-directed health plans, which feature high deductibles and individual spending accounts, are most common among large employers, which typically offer them as one of several options for medical coverage.
More than 60 percent of large employers with an HSA plan said employees reacted positively to it. Average enrollment in HSAs or HRAs at large employers that offered them for at least three years has increased from 21 percent in 2005 to 29 percent in 2007, according to Mercer.
“With these encouraging results, it might seem surprising that employers aren’t moving faster to adopt CDHPs,” Bos said.
“But they worry such a big change in such an important benefit could hurt attraction and retention. So even when they do add a CDHP, most make it an option, which dilutes potential savings.”
Mercer also asked employers what they think about health care reform proposals. Only 23 percent support requiring employers to either offer health insurance or pay into a fund to provide coverage to the uninsured. The same percentage supported requiring all individuals to buy insurance.
“You might expect more employer health plan sponsors to favor individual mandates, which could relieve existing employer plans of cost shifting from the uninsured,” Bos said. “It may be that employers — or at least the individuals responding to the survey — are simply distrustful of any kind of government-imposed mandate.”
Democratic presidential candidate Dennis Kucinich, a House member from Ohio, said the decline in small business coverage demonstrates the need for national health insurance, or “Medicare for All.”
“Small businesses are no longer willing to bear the burden of the cost of keeping the health insurance industry profitable,” he said. “It’s time for America to join with the rest of the industrialized nations of the world in guaranteeing health care for its people.”
Source: bizjournals.com