Health benefit offers from small businesses keep vanishing
Only half of America’s smallest businesses now offer health coverage to their workers because many say steady cost increases have made it too expensive to afford a benefit that nearly all large employers still provide.
The Kaiser Family Foundation said Tuesday that 50 percent of companies with three to 49 employees offered coverage this year. That’s down from 59 percent in 2012 and 66 percent more than a decade ago.
“There’s just not as much money around for compensation, including benefits,” said Gary Claxton, a Kaiser vice president and lead author of the nonprofit health policy organization’s annual health benefits study.
Employer-sponsored coverage is the most common form of health insurance in the United States, covering an estimated 151 million people under age 65, according to Kaiser. The federal Affordable Care Act requires all companies with 50 or more full-time employees to offer it.
Ten percent said their workers weren’t interested in the benefit.
Some opted to give their employees more money to buy coverage on the individual market, which includes the Affordable Care Act’s public marketplaces. But Kaiser found that only 2 percent of the small businesses that don’t offer coverage made that decision because their employees can get something better on the ACA marketplaces.
The cost of coverage, known as the premium, for an employer-sponsored family plan climbed 3 percent this year to $18,764 on average, according to the survey of more than 2,000 businesses Kaiser conducted with the Health Research & Educational Trust. Companies pay just under 70 percent of that, on average, and workers pay the rest.
Cost increases have been more modest in recent years and much smaller than the double-digit percentage hikes seen on the ACA marketplaces. Even so, years of smaller increases add up, and insurance costs routinely climb faster than inflation. That means the health insurance costs that employers face have climbed faster than what they can charge for products and services, and that has pushed the benefit out of reach for many business owners.
“I just can’t afford it anymore,” he said. “I gave the employees raises to what I was paying for premiums last year and told them they’re on their own to find insurance now.”
The Affordable Care Act prompted Bob Borenstein to stop offering insurance to employees of his Philadelphia childcare services business, Appletree Developmental Center. He said many of his staff of 32 employees are under age 26, so they can still get coverage through a parent’s health insurance. The public insurance exchanges established by the law offered cheaper options for those who still needed insurance.
He has since shifted funds he would have spent on benefits into higher salaries and classroom improvements.
“It was a better use of our money,” he said.
Kaiser released its survey Tuesday while companies are preparing to tell their employees about coverage options for next year.