COST: Government Report Describes Health Care’s Drain on Small Business

Skyrocketing health care costs are a burden on small businesses and harm their workers, says a new U.S. Department of Health and Human Services report. No surprise there. But the sheer speed with which the problem is worsening makes comprehensive reform of the American health care system all the more urgent.

Escalating health care costs are damaging small businesses and the people they employ by consuming more payroll dollars and limiting business growth, the report states. Perhaps the grimmest news is how rapidly and sharply health insurance offered by small businesses has declined. From the executive summary:

In the past two years, more than half of small businesses that offered coverage reported switching to plans with higher out-of-pocket costs in response to rising premiums. Another third switched to a plan that covered fewer services, and 12  percent dropped coverage entirely.

The decline in quality and coverage of health insurance by small businesses is well-documented, but that's still a startlingly rapid decline in coverage for the millions of Americans working in small businesses.

All of this bad news is prodding the business community to offer its own visions for comprehensive health reform and to work with Congress and the Administration to shape reform.  

For those interested in the effects of high health care costs on the competitiveness of American business, read New America's report on the topic from last year.