Small-business healthcare survey reveals premium increases
RALEIGH, Oct. 31, 2013--Despite repeated assurances from the administration to the contrary, new research by the National Federation of Independent Business has found that the overwhelming majority of small-business owners continue to experience increased health insurance premiums.
In a new survey of 921 small-business owners and operators from around the country, 64 percent reported that they pay more for insurance premiums per employee in 2013 than they did in 2012. For a population of job-creators that has consistently identified the “rising cost of health insurance” as its No. 1 business problem for close to 30 years, Obamacare has failed to address this most important of small-business concerns.
“The law’s authors were primarily focused on increasing insurance coverage and expanding benefits — they gave little or no consideration to concerns about cost or who would foot the bill. Ironically, had they instead made reducing costs a priority, this would have been a natural incentive for increasing coverage,” said NFIB Research Foundation senior fellow and study author William J. Dennis.
“Unfortunately though, this single-minded approach resulted in a law with a rising price tag, and Obamacare’s authors failed to consider that someone has to pay for all the bells and whistles included in the law. That ‘someone’ it turns out is often the small-business community — small employers, their employees and their families.”
Gregg Thompson, state director of NFIB/North Carolina, said the results of the survey were disappointing if not surprising.
"The cost of health insurance is a big issue for small-business owners, and this survey says things are only getting worse, not better," he said.
The new healthcare study is the first segment of a three-year longitudinal look at how the healthcare law will impact the small-business community. The same owners will participate in each survey over its three years course; this unique approach to researching will allow NFIB to measure the impact of the law on small firms throughout the implementation process. This first segment was fielded in the summer of 2013, prior to the start of the open enrollment season.
“We see the results of this year’s research as establishing a baseline; what we will learn from the developing responses in the next two years will tell us more and more about the law and how it changes—or does not change—the behaviors of the small-business community,” added Dennis.
According the NFIB’s study, Small Business’s Introduction to the Affordable Care Act, the health insurance premium costs incurred by small businesses (employer and employee shares) average $6,721 a month ($80,652 a year). The median cost is about $3,500 every 30 days. Deductibles for beneficiaries of small-business health insurance products also rose in 2013. While two of three (67 percent) of plans maintained deductibles at the prior year’s level, another 28 percent increased deductibles; only 4 percent lowered deductibles in their plans.
NFIB also found that small-business owners sought to defray rising costs in a variety of ways and typically attempted to shield employees and customers. The most frequent means of defraying increased costs was for small employers to lower profitability (66 percent), followed by increased productivity (48 percent), and the delay, postponement or elimination of business investment (40 percent).
In addition to cost concerns, the study revealed that many small-business owners are getting their information about the healthcare law from a historically unlikely source: the news media. Forty-two (42) percent of small employers reported that the news media was their primary source of information about Obamacare, which is atypical of a community that usually ranks the news media near the bottom of its preferred business information sources. The government, as a source of information about the law, held the bottom position with only four percent of owners naming it as their most important source.
While a plurality of small-business owners indicated they are “very” or “somewhat” familiar with the law (17 and 49 percent respectively), an examination of their responses to more detailed questions about Obamacare suggests there is a fair amount of confusion. “The law is a perpetually changing document,” said NFIB legislative manager Kevin Kuhlman.
“There are thousands of pages of statute and even lengthier subsequent regulations associated with Obamacare," he said. "Couple this with the litany of delays and ‘clarifications’ we’ve seen in just a past few months, and it isn’t difficult to imagine why there is a gap between perceived and actual knowledge about the law.” Just over half of small-business owners surveyed said that they are satisfied with the information they have about ACA; just under half are not.
Other study findings include:
- Fourteen (14) percent of non-offering small employers provide reimbursement or a direct payment to employees for the purchase of health insurance.
- Four percent of non-offering small employers within the last 12 months experienced employee requests to provide health insurance.
- As many as 150,000 small businesses may be subject to the so-called “aggregation rules”, that is, rules requiring owners of more than one business to consolidate employment in all of their businesses for purposes of reaching the 50 full-time equivalent employee employer-mandate threshold.
- There is no rush to self-insurance, despite ACA’s incentives to do so; but, interest is rising. Four percent of small employers currently offering health insurance self-insure, with those employing 20 – 49 people doing so in 7 percent of cases and those employing 50 – 100 people in 13 percent of them. Four percent say a switch from the fully-insured market to self-insurance is “highly” likely in the next 12 months; another 7 percent say it is “somewhat” likely.
- Small employers often pay the entire health insurance premium for their employees, 38 percent for individual coverage, 23 percent for family coverage and 21 percent for plus-one coverage. A clear association appears between employee participation and the size of the employer cost-share. The more employer pays (on a percentage basis), the more employees are likely to participate.