Senate Democrats

Senate Health Reform Legislation Helps Small Business

Small business owners know that the rising cost of health care makes it more difficult to for them to compete, both in America and abroad.  That’s why the Senate health reform legislation takes steps to curb the rising costs of health care overall, and help small businesses remain competitive.

Rising costs of health care hinders small businesses

Small Businesses Drive Economic Growth and Job Creation.  In 2006, 89 percent of all firms had fewer than 20 employees and accounted for 18 percent of private sector employment.  And in that same year, firms with 50 employees represented 96 percent of all firms and 28 percent of private sector employment.  Between 1992 and 2005, firms with 20 employees or less accounted for 25 percent of net employment increases – – a growth rate that’s “40 percent greater than the corresponding rate for all other firms.” [Council of Economic Advisors, 7/25/2009]

High Costs Make Offering Health Benefits Difficult.  One survey found that three-quarters of small businesses that didn’t offer health benefits cited high costs as the reason, with high administrative costs for servicing a very small group of insured individuals greatly contributing to those high costs. [Managed Care Interface, 9/2003]  Small businesses usually pay premiums that are 18 percent greater than larger companies for the same insurance. [National Center for Policy Analysis, 2/11/2009]  According to a survey conducted by the Robert Wood Johnson Foundation, these higher costs could force over one-third of small business owners to reduce their employees’ health insurance benefits. [Robert Wood Johnson Foundation, 12/3/2008]

Rising Health Costs Hinder Business Growth.   The cost of health care is holding businesses back.  Forty percent of small business owners have said that high health care costs have a negative effect on other parts of their business, like preventing business growth. [The Main Street Alliance, 1/2009]  One study found that these higher costs could force more than one-third of small business owners to reduce their employees’ health insurance benefits. [Robert Wood Johnson Foundation, 12/3/2008]

As Costs Increase and the Economy Declines, Fewer Businesses Can Afford to Offer Health Care.  Between 2000 and 2007, the percentage of small businesses offering health insurance coverage to their employees dropped from 68 percent to 59 percent. [Kaiser Family Foundation, 9/24/2008]  This decline is expected to continue as roughly 10 percent of small businesses are considering eliminating coverage during the next year and around 19 percent of companies are planning to do so over the next three to five years. [Wall Street Journal, 5/26/2009]  These reductions will add to the 13 million small business employees who are already uninsured. [, accessed 6/7/2009]

Workers in Small Firms are Nearly Twice as Likely to be Uninsured.  The Council of Economic Advisors (CEA) reports that 29 percent of workers under age 65 in firms with fewer than 25 employees were uninsured, compared to just 10 percent of similar workers in firms with 500 or more employees. [Council of Economic Advisors, 7/25/2009]

Health reform will reduce costs, keep American businesses competitive

Legislation Will Lower Costs of Health Care for Small Businesses, Help Them Provide for Their Employees.  Not only will Senate health reform legislation bring down health insurance costs for all Americans making health insurance more affordable for everyone, it will also provide small employers with extra help in meeting their goal of offering their employees quality health insurance.  Tax credits are included in the Senate health legislation that will help small businesses continue to offer health insurance to their employees, or to offer it for the first time. [Senate Health, Education, Labor and Pensions (HELP) Committee’s Affordable Health Choices Act]

Health Exchanges Will Increase Competition in the Small Group Market, Make Insurance More Affordable for Small Businesses.  Small businesses in particular will benefit from the creation of a health insurance exchange, which will give small firms a choice of multiple insurance plans at a lower cost and of a higher quality than what currently exist in the small group market. [Senate HELP Committee’s Affordable Health Choices Act]