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COST: Small Businesses, Big Health Care Problems

Meredith Hughes - 
February 3, 2009 - 1:33pm

For small businesses the economic hits just keep coming, and as the New York Times reminds us, the hardest hits are often from health care.

The Times' Kevin Sack profiles several small business owners faced with a difficult choice: cut health care benefits or close their doors. Amberly Allen, who runs her own direct-mail firm, spends 17 percent of her firm's payroll on employee health benefits. Thomas L. Fritts, who owns a sporting goods store in Illinois, saw his company's health care costs rise 30 percent last year while his business's sales plummeted 60 percent.

Small business owners are shifting a greater share of health care costs onto their employees. In the past two years, for businesses with fewer than 200 workers, the percentage of employees enrolled in a plan with an annual deductible of $1,000 or more jumped from 16 percent in 2006 to 35 percent in 2008. See the chart below from the 2008 Kaiser HRET survey:

Previously, we've looked at the Business Case for Health Reform in conjunction with the Committee for Economic Development and Better Health Care Together. According to Lois Quam of the consulting firm Piper Jaffray, problems with health care cost in the U.S. hurt small businesses the most, to the point that "health care has become an barrier to entrepreneurship and job creation." Removing that barrier through comprehensive health reform makes sense for small businesses and our economy as whole. Tomorrow the House Small Business Committee will hear testimony on "Health Care Reform in a Struggling Economy: What is on the Horizon for Small Business."

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Comments

Health Reform

Submitted by Michael Turpin (not verified) on June 3, 2009 - 12:12pm.

Hi, I am the ex-CEO of United Healthcare in the Northeast and a consultant in healthcare for the last 25 years. I regularly write on health reform and the need to drive changes, especially relief for small business. Having witnessed first hands the games and opaque nature of the verious stakeholders, I have offered up a few publications that might prove complimentary to your health dialogue.

Let me know if you would like me to send the individual articles for review or just send you links. I am including one for your review so you can get a sense of the tone and quality.

http://usturpin.wordpress.com/2009/05/15/harry-and-loui…-to-washington/

Kind Regards,

Michael Turpin
Executive Vice President
USI Insurance Holding Corp

OMG

Submitted by Win At KA (not verified) on July 22, 2009 - 11:06pm.

TL Fritts is a sports store in my town i cant believe i found this!!

This is why we need to cut costs in the private sector first

Submitted by AnnanAmos (not verified) on August 19, 2009 - 6:39pm.

This is why there is a definitive need to allow the private sector to find out how to cut costs on their own. If the private sector can cut costs with their own methods of health care reform that doesn't compromise quality of care or ease of access, then the less businesses and employers will have to pay for it. It probably can be done, but it may not be the ideal solution for them - but if it means that a few suits have to have their salaries cut, or a few middle managers get fired (as if there isn't enough middle management or micro-management in the corporate world already) then I'm sorry to say, but tough - there is a bigger picture, here. The bigger picture is obviously that costs are spiraling out of control, and the public (i.e. the customers) are going to demand a little more. A $1,000 deductible is pretty ridiculous - far beyond the reach of most people. Not many have $1,000 lying around in petty cash.
It seems that a single payer system may be inevitable. That isn't the greatest prospect in the world, at least for insurance companies, but doctors and hospitals probably don't care as long as they're getting paid, period.
Also, some tort reform is in order. Doctors are fleeing in droves, and you can't have someone who is willing to work as hard as a doctor needs to be afraid to practice their profession, or need to get a joint MB/JD/MBA just to make a medical career work.