Health Care Concerns Loom over Micro-Businesses

Improving the performance of America's health care system is one the nation's most important challenges, the chairman of the Federal Reserve said today, shortly before a micro-business advocacy group released data showing that health care's high cost continues to be a significant barrier to growth.

Fed Chairman Ben Bernanke said challenges fall into three main areas: improving access to health care for the 47 million uninsured Americans -- which comprise about 16 percent of the population -- bolstering the quality of care and controlling costs. He spoke on Capitol Hill during a summit on health care reform.

The National Association for the Self-Employed released in a report today that the number of micro-businesses(pdf) that offered health plans to full-time employees dropped significantly from 46.2 percent in 2005 to 18.6 percent today. Meanwhile, more than 65 percent of the survey takers said cost was the most significant barrier to whether they offered health insurance to employees.

Additionally, companies with gross sales under $50,000 saw the greatest increase in access to health care coverage, with 40 percent currently offering insurance compared to only 13.8 percent in 2005. One in 10 of the 2008 respondents spent at least 25 percent of their gross revenue on health insurance, compared to 10.1 percent in 2005.

Kristie Darien, the association's executive director, noted that there were some bright spots in the new data.

Cost of health insurance increased an average of 14.7 percent this year, which is less than the 20.7 percent increase in 2005.

"The baker, the house painter and the 20 million other micro-businesses in the United States already are struggling to survive in this economy, could be further threatened if we cannot find a way to make insurance more affordable," Darien said.

More data from NASE's study will be available Tuesday.

By Sharon McLoone |  June 16, 2008; 4:41 PM ET Data Points
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We certainly already know that the high cost of healthcare is a major barrier to growth, but the numbers are really interesting. I wouldn't have guessed that those of us with low gross sales were doing better in terms of increasing access to insurance!

Posted by: Healthcare - a Luxury? | June 17, 2008 12:22 PM

The only explanation I can think of for the statement that the smallest businesses have the highest participation in healthcare is that many owners are in situations like my own. In my microbusiness the only employees are my wife and myself and we have a small business group policy where we struggle to make the $1570.00 per month Blue Cross payment for our family of four. The high cost is killing us, but we have a child with medical problems and we must stay insured or face bankruptcy the next time she needs treatment.

Posted by: BlueCrossed | June 26, 2008 9:43 AM

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