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April 4, 2008 ― New Study Reaffirms Need To Increase Affordability Of Small Business Healthcare

April 4, 2008
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The economic burden of providing health insurance for workers increased more for small businesses than for large ones from 2000 to 2005, but the spike did not cause a significant number of small employers to abandon the benefit.

The Kauffman-RAND Institute for Entrepreneurship Public Policy announced results from a study that examined the impact of rising healthcare costs on small business. The National Federation of Independent Business, a small business advocate association, responded to the study by stating the findings showed healthcare costs must be contained to safeguard the viability of small business.

“Annual increases in healthcare premiums consume a higher percentage of a business’ payroll now more than ever, far outpacing wage increases,” said Todd Stottlemyer, president and CEO of NFIB. “As a result, many small business owners face a tough decision: provide a raise to their employees or offer healthcare coverage.”

The RAND study found that half of all small businesses that offer health insurance spent more than 10 percent of their payroll on this benefit, “further illustrating why healthcare costs have been the No.1 concern for small business owners and their employees for the past 20 years.”

To address the problem of rising small business healthcare costs, NFIB has launched “Solutions Start Here,” its largest and most aggressive healthcare campaign to-date. As part of this campaign, NFIB will host “Fix-it Forums” in nine cities across the country in order to shed light on how healthcare costs are impacting small business owners and their employees.

“We are also hosting a series of Health Reform Forums that bring together policymakers and health experts to discuss what policy options could be most effective in forming legislation that will increase affordability, enhance coverage and maintain quality,” Stottlemyer said. “Because when healthcare is fixed for small business, it’s fixed for America.”

The Kauffman-RAND Institute report, authored by Drs. Susan M. Gates and Christine Eibner, found that small firms with fewer than 25 employees have been significantly impacted by increases in healthcare costs, with a 43.5 percent increase in the median cost of coverage between 2000 and 2005. This impact is even greater on firms with fewer than 11 employees, experiencing a 53 percent increase over the same time period.

Not only are healthcare costs steadily rising for small businesses, Gates’ and Eibner’s research also found the quality of coverage is not consistent with that of larger firms.

For more information about “Solutions Start Here” or NFIB, contact Mike Diegel, 202/314-2004.

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