CNY Business Journal (1996+) - Survey: Small businesses say health coverage is too costly

The majority of small-business owners believe that, at its current price, health-care insurance is far beyond their means, according to a new national employer survey on health-care reform from New York City-based Mercer.
More than 3,400 employers nationwide, with fewer than 500 workers, which the survey defined as a small business, participated in the survey. Of those, 545 employers do not offer health-insurance benefits to employees.
When asked their primary reason for not offering health coverage, 43 percent of all employers without a health plan said they couldn’t afford it.

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Another 20 percent said their employees were covered under different plans, and 9 percent of respondents each cited high work-force turnover and the perception that employees would rather have more pay than health coverage as reasons for not offering coverage.
The employers were also asked, if they were to offer a health plan, how much they would be willing to contribute per employee per month. For 59 percent, that amount ranges from $0 to no more than $50.
Only 10 percent said they would pay at least $200.
“If you look at it in upstate New York, the majority of employers that offer health plans pay far in excess of those two numbers,” says Thomas Flynn, a principal with Mercer, who is based in Rochester and serves the entire upstate region.
It’s common for employers with fewer than 500 employees in Syracuse, Rochester, Binghamton, and Albany to spend over $200 for single coverage as their share, and possibly over $600 for their share of family coverage, says Flynn.
Even lower-cost, higher-deductible plans involving health savings accounts don’t appear to be an option for most small-business owners, according to Mercer.
“In most states, $50 is less than a third of the cost of the high-deductible health plans,” says Flynn.
Additionally in the health-care reform survey, 50 percent of respondents oppose “play or pay” laws, which require employers to either offer health coverage or pay into a government fund to cover the uninsured. Of the remaining respondents, 31 percent support the idea, while 19 percent neither approve nor disapprove.
Of those businesses opposing “play or pay” laws, wholesalers/retailers (68 percent) and manufacturers (56 percent) were most likely to disapprove, according to the Mercer survey.
With employers more inclined to disapprove than approve of the reforms, the results demonstrate the difficulties of trying to achieve consensus around health-care system changes, Mercer said.
Only two of the reform ideas addressed in the survey have the support of the majority or near majority of employers - requiring individual health cover-age and federal stop-loss protection for employers.
About 53 percent support requiring people to have health coverage if they can afford it, either through their employer or buying it on their own.
Neither presidential candidate’s platform included such an individual-mandate proposal, but the plan of President-elect Barack Obama (D-Ill.) comes closest, requiring that all children have coverage, Mercer said.
The survey also found that about 46 percent of respondents support the federal government providing stop-loss protection to cover an employer’s catastrophic expenses.
Employers who are self-insured use stop-loss protection in case an unexpectedly large number of employees become seriously ill and the treatments become too costly to handle. Stop-loss insurance pays the employee medical bills after the business owner has paid a certain pre-determined amount
“From this standpoint, employers would like to see federal protection instead of private protection that would limit the employer’s expenses,” says Flynn.
The Mercer survey is based on responses to as many. as 10,000 requests nationwide for participation, says Flynn. The normal response rate is between 3,000 and 3,500 surveys. The respondents include both Mercer clients and non-clients. The company’s database includes more than 80 percent of all U.S. employers, Flynn says.
The survey used a probability sample and the margin of error is plus or minus three percentage points.
Copyright Central New York Business Journal Nov 14, 2008
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