October 19, 2009

Insurance at Risk: Small Business Employees Risk Losing Coverage: The Decline in Employer-Based Coverage

America's businesses are struggling as the cost of health care continues to skyrocket. Premiums for employer-based health insurance have more than doubled since 2000. Rising health care costs cut into employee wages and impede hiring and business growth. As a result, the percentage of firms offering health insurance coverage has declined. Between 2000 and 2009, the percentage of firms offering coverage fell from 69 to 60.4 percent. Small businesses in particular struggle under the current health care system.

Meena Seshamani, MD, PhD, Director of Policy Analysis, HHS Office of Health Reform and Ellen Montz, MPA, HHS Office of Health Reform write in this report how health insurance reform can help stabilize insurance coverage for Americans in small businesses. Health insurance reform addresses this burden by expanding health care coverage to all Americans, enabling streamlined, less costly, and more efficient care. Health insurance reform also provides small businesses with tax credits to help them provide health insurance for their employees. This makes health care more affordable for small businesses and workers, solidifying and strengthening employer-based coverage for upcoming years. Consumer protections in health insurance reform guarantees that families have quality, affordable health insurance choices if there is an unforeseeable circumstance. Health insurance reform creates a health insurance exchange so Americans without access to affordable insurance can compare prices and plans and decide which affordable option is right. The exchange also significantly reduces administrative costs for small businesses by enabling them to easily compare the prices, benefits, and performance of health plans. Health insurance reform prevents any insurance company from denying coverage based on underlying health status and it prohibits insurance companies from charging more if someone is sick, older, or a woman. For the millions of young adults who work in small businesses, health insurance reform also allows them to stay on their parents' employer-based insurance until the age of 26, providing an essential option for coverage.