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Survey Shows Fewer Small Businesses Offer Health Care to Employees

Posted on: Thursday, 15 September 2005, 21:00 CDT

Sep. 15--As co-owner of Bubba's Auto Care, Tammy Baillargeon says she wishes she could offer her employees health care.

"But it's too expensive," the Roseville businesswoman said, referring to rising health care insurance costs.

In that sense, Baillargeon fits into a pattern highlighted by a Henry J. Kaiser Family Foundation survey: Fewer small businesses nationwide are offering health coverage as premium costs continue to climb.

Released Wednesday, the annual survey of employers' health benefits found that for the first time in nearly a decade, less than half of businesses with nine or fewer workers offer health insurance. Among those small firms, 47 percent provided coverage in 2005, down from 58 percent in 2002 and 53 percent in 1996.

"Small businesses have made the call that to stay alive, health care isn't something they can provide. I think it's a tragic calculation," said Peter Lee, president of Pacific Business Group on Health, which buys health insurance for large employers.

"The danger of that is that small business is the driver of the American economy," he said.

The survey also found that the cost of health insurance for working Americans grew by 9.2 percent this year, ending four consecutive years of double-digit increases but still far outpacing the rate of inflation. Premiums increased an average of 11.2 percent in 2004.

"The good news is that it's a slower rate of increase than last year," said Gary Claxton, vice president of the Kaiser Family Foundation. "But it's still substantially higher than where wages are going."

Across the country, fewer firms are offering health coverage. Sixty percent of those surveyed provided health insurance in 2005, down from 66 percent in 2003 and 69 percent in 2000.

The annual average premium for family coverage hit $10,880 in 2005, slightly more than the $10,712 annual income of a full-time worker earning the federal $5.15 minimum wage, the survey found. (California's minimum wage is $6.75 an hour.)

The average U.S. worker paid $2,713 in 2005 toward family health care premiums, $1,094 more than in 2000. On average, employees' share of premiums has stayed relatively stable at 26 percent, the survey found.

Still, the rising cost of health insurance has forced employers to shift other costs onto their workers, including higher deductibles.

Davis-based Avantpage, a translation firm, for instance, switched this year from an HMO plan with high monthly premiums to a lower-priced plan that doesn't reimburse employees until they spend $2,500 in health costs.

"I was not very happy to have to change insurance plans. Instead of scrapping it, which I considered, I went to this plan," said owner Luis Miguel.

That puts Miguel among the 20 percent of employers that offer high-deductible health plan options, the Kaiser survey found. That's double the 10 percent that did so in 2004 and quadruple the 5 percent in 2003.

High-deductible plans are defined in the survey as those with a minimum $1,000 deductible for single coverage and $2,000 for family coverage. It does not mean all employees in those firms participate in the plan.

Employers also are coping with the escalating costs by raising the price of visits to doctors' offices and out-of-pocket payments for prescription drugs.

One example is United Corporate Furnishings, where company officials doubled co-pays for hospital stays to $100 this year.

But the Sacramento-based office furniture and design company continues to pay the full cost of monthly premiums for employees, which grew about 15percent this year to $266. Workers pay an additional $266 a month to cover a single dependent.

"I don't mind that much," said JoAnne Schmelzer, an account manager at the company. "Health care costs are just out of whack. I'm paying too much to cover my husband; my employer is paying too much to cover me."

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Source: The Sacramento Bee

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