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Small businesses shying away from sponsoring health insurance

Health Care and Health Insurance
by Brian Rankin
Consumers still struggle with health insurance deductibles
Consumers still struggle with health insurance deductibles

The changes to national health care laws that came with the Patient Protection and Affordable Care Act have largely been good for millions of Americans who gained the ability to obtain low-cost coverage for the first time. However, there have been some challenges related to the change as well, including the fact that some companies are struggling under the weight of added health care costs stemming from the coverage mandate.

Indeed, despite the fact that failure to provide benefits could result in businesses having to pay potentially significant fines (depending on company size), smaller companies in particular have scaled back coverage for their employees since 2008, according to the latest industry data from the Employee Benefit Research Institute. Since that time, the percentage of companies with fewer than 10 employees that offer such coverage declined 36 percent from the end of 2008 through the end of last year. In all, only 22.7 percent of those companies now provide options, down from 35.6 percent seven years earlier.

Many smaller employers now choose not to extend coverage to their workers.Many smaller employers now choose not to extend coverage to their workers.

Numbers rise as company size grows
Meanwhile, slightly fewer than half of all small businesses with between 10 and 24 workers provided those individuals with coverage through the end of last year, the report said. That was down from nearly 2 in 3 that did so in 2008, just before many aspects of the ACA went into effect. Meanwhile, a little less than 3 in 4 companies with between 25 and 99 employees sponsored employees' health insurance, down from more than 4 in 5 seven years prior.

But among large companies, which have a specific mandate to provide coverage that many smaller businesses do not, are keeping up with the requirement, the study found. Indeed, 99 percent of companies with 1,000 or more employees offered medical insurance to those workers, a number which was unchanged over the seven-year period. Meanwhile, companies with between 100 and 999 people working for them likewise held more or less steady, with numbers vacillating between 92.5 percent and 95.1 percent during that time.

Other rising health care concerns
In addition to these issues, the fact is that many Americans who don't live in large urban centers may be paying more for their coverage, according to a report from the Associated Press. One study by the Colorado Division of Insurance found that people living in rural areas pay significantly more than non-rural state residents, and lawmakers representing those districts say the practice may be unfair. Consequently, they are now pushing for the state to mandate a single price point for coverage regardless of where people live.

And though that may result in relatively small increases in coverage costs for urban residents, while those for rural Coloradans declines potentially quite sharply, insurers say there is nothing foul afoot here, the report said. Based on industry numbers, it's simply more costly to provide health care in rural areas, for a number of reasons.

With all this in mind, it may actually be incumbent upon health insurers to reach out to consumers and explain why they pay what they do for coverage, and what their options might be when it comes to coverage if their employers do not provide it for them.



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