A Large Fraction of Uninsured Workers are in Small Businesses: Nearly one-third of the uninsured – 13 million people – are employees of firms with less than 100 workers.¹

Fewer Small Businesses Are Offering Insurance: From 2000 to 2007, the proportion of non-elderly Americans covered by employer-based health insurance fell from 66% to 61%.² Much of this decline stems from small business. The percentage of small businesses offering coverage dropped from 68% to 59%, while large firms held stable at 99%.³

Workers Not Offered Coverage Are At Great Risk: Half of workers in small firms that do not offer health benefits are uninsured. About a third of such workers in firms with fewer than 50 employees obtain insurance through a spouse.⁴

The Burden of Rising Health Care Costs

Cost is the Barrier: The driving force behind the erosion of health coverage among small businesses is cost. In one national survey, nearly three-quarters of small businesses that did not offer benefits cited high premiums as the reason.⁵ One reason small businesses feel this pinch is that they pay more on average for administrative services such as marketing, enrollment, and premium collection.⁶

Disrupts and Diminishes Coverage: In the past two years, more than half of small businesses that offered coverage reported switching to plans with higher out-of-pocket costs in response to rising premiums. Another third switched to a plan that covered fewer services, and 12% dropped coverage entirely.⁷

Drain on Payroll: Among small businesses that offer coverage, 40% report spending more than 10% of their payroll on health care costs.⁸

Limits Business Growth: Forty percent of small businesses said that health costs have had a negative impact on other parts of their business (for example, contributing to high employee turnover or preventing business growth).⁹

Providing Health Benefits is “The Right Thing to Do”

Valued by Employers and Employees: Small employers state that offering benefits helps with employee recruitment and retention, increases productivity, and is the “right thing to do.”¹⁰

Improves Productivity: Small firms are often hit harder when workers go on sick leave, because they cannot afford to maintain a “reserve pool” of workers to replace those who are absent.¹¹ Indeed, nearly half of small businesses in a recent survey said that their business would be more productive if they had health coverage for themselves and their employees.¹²

Reform as a Top Priority for Small Businesses: Nearly half of small business owners in a recent survey said that ‘making health care more affordable’ is the idea Washington should address first.¹³ The National Small Business Association adds, “…relief from escalating health insurance premiums… can only be achieved through a broad reform of the health care system with a goal of universal coverage, focus on individual responsibility and empowerment, the creation of the right market-based incentives, and a relentless focus on improving quality.”¹⁴

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