Small business owners aren’t looking for a break in high health insurance rates any time in the near future.
A new survey released by the advocacy group National Small Business Association reveals that 90% of small business owners said their costs are up in 2015 over the last year, and 84% expect to pay more in 2016. Many trace this increase in rates to the advent of the Affordable Care Act in 2010.
Perhaps as a result of these rate hikes, the number of companies offering health benefits to their employees fell 5% to 65% this year from 2014. The largest decline was among companies with 10 to 20 employees – 73% are offering benefits this year as opposed to 86% who offered benefits last year.
Still, the vast majority of small businesses are committed to offering health benefits to their workers. Nearly 94% believe offering health insurance is important to recruit or retain top workers, and nearly half provide health insurance to more than 80% of their workers.
That belief is preventing small business owners from passing on those cost increases to their employees. Fewer owners than ever before are considering this path, with just 34% saying they’re thinking of increasing employee contributions – down from 42% in 2014.
These findings contradict earlier reports from Aetna Inc. and Kaiser Permanente, which both reflected a decrease in their small business demographic, describing the trend modestly as “some erosion” or “som contraction.”
Kaiser Vice President Joe Smith said the trend was particularly strong in areas where insurers are offering inexpensive individual plans – seen as a good alternative for business owners who no longer feel they can afford to offer a group plan.
Many business owners choosing to drop coverage have cited higher premiums as their primary motivator. Affordable individual plans offered through online exchanges have also been key in helping employers take the plunge, with additional subsidies for lower-income workers.
“That’s often the main determining factor,” Michael Stahl, senior vice president at HealthMarkets Inc. agency, told the Journal.
For their part, producers and insurers are attempting to recapture at least some of that lost business buy signing up employees for individual plans. Commission for these individual policyholders is slim, though—already a decline from writing small business, and cut further still thanks to changes in the medical loss ratio under the Affordable Care Act.
The survey was conducted from mid-September to early October and included members of the NSBA as well as owners who don’t belong to the organization.
