Obtaining health insurance is a huge concern for small business owners during COVID-19. Some struggle with getting coverage for themselves and their employees. But those that have insurance are currently struggling to keep up with rising health care costs.
Offering health care is one of the benefits companies offer to lure in employees. However, the increased costs have left some small businesses wondering if health care benefits are sustainable without passing the costs on to customers in price.
Some companies have decided to continue offering health care perks for employees. According to an article in Axios from February, only “58% of companies with fewer than 200 workers and 31% of companies with fewer than 50 workers offer health insurance, and that insurance comes with much higher deductibles on average, surveys show.”
Researchers at Georgetown University and the Urban Institute found in August 2021 that some companies retained benefits because they didn’t want employees to be uninsured during the pandemic but also didn’t want workers quitting to work for competitors.
“There’s a lot of misadventures that small employers can get into when they try to save a dollar,” Kathy Hempstead, a health insurance expert at the Robert Wood Johnson Foundation, told Axios.
Tim Eichinger, co-owner of Black Husky Brewing, gives his four full-time employees, including him and his wife, health care benefits — but it’s costly. His company’s coverage comes with a deductible of more than $6,000, he said.
“It really does limit the growth of small companies like ours,” Eichinger said.
A new survey by the Small Business for America’s Future, a nationwide coalition of small business owners and leaders, confirms the fears of small businesses when it comes to covering health costs.
The survey found that 95 percent of 1,209 small business owners saw an increase in health insurance prices over the last four years. It states that more than half claim their yearly cost increase is 10 percent or higher.
The Small Business for America’s Future does have an agenda. It is described by InfluenceWatch as “a left-of-center advocacy organization that promotes left-leaning federal programs and increased spending.” Among its objectives is to strengthen the Affordable Care Act (ACA) and undo the 2017 Tax Cuts and Jobs Act.
The ACA
The ACA The Affordable Care Act, known as Obamacare, was a landmark federal statute signed into law by President Barack Obama on March 23, 2010. It is a comprehensive reform law that increases health insurance coverage for the uninsured and implemented several health insurance reforms; but for several years there has been a major push eliminate ACA. In March 2019, the U.S. Department of Justice filed a brief supporting the decision that invalidated the ACA. In April 2019, the U.S. House of Representatives filed a brief saying eliminated ACA would cause an upheaval of the industry. The Inflation Reduction Act of 2022 extended the ACA benefits for the next three years.
The ACA also established the Small Business Health Options Program (SHOP) for small employers — generally those with 1–50 full-time and full-time equivalent employees (FTEs) — who want to provide health and dental coverage to their employees, according to Healthcare.gov.
Employers Still Say Faced With Dilemma
However, the rising cost of coverage has impacted nearly half of the surveyed entrepreneurs, which cuts into their companies’ growth. To offset the costs, many were left to raise the price of their goods or services.
“Rising health care costs are adding financial stress to small business owners on top of inflation,” company co-chair Dr. Erika Gonzalez told Ebony.
She continued, “Small business owners are being forced to make difficult decisions like passing on the costs to consumers or requiring employees to shoulder a greater burden of healthcare costs to keep out of the red. This is damaging our economic health and stability.”
High health care prices caused 38 percent of business owners to delay hiring, while 28 percent had to pause hiring new employees.
Small Businesses Want Government to Lower Health Costs
Nearly 80 percent of small business owners surveyed by Small Business for America said they want federal lawmakers to help lower the costs of health care.
“The cost of health coverage has real-world consequences for small businesses that affect our entire economy,” said Shaundell Newsome, the owner of Las Vegas-based Sumnu Marketing in and the chair of the Las Vegas Urban Chamber of Commerce, told Nevada Current. Rising health costs results in companies increasing costs for consumers or covering less of employee health insurance costs, said Newsome, who is also the co-chair of Small Business for America’s Future.
In regard to his state, Newsome said if SHOP was still an option it would help. Nevada previously offered SHOP, but its health insurance carriers stopped the services in 2022.
Under SHOP, small businesses would be able to unite to lower costs, Newsome said.
Stats show that 74 percent considered reducing their business contributions to ensure their employees have coverage. Yet, 53 percent contemplated no longer providing healthcare for their employees.
For this reason, entrepreneurs are hoping lawmakers will address the high costs with more solutions than problems. Specifically, they suggest lowering medical costs and expanding coverage for employees. Many anticipate seeing long-term fixes contrary to other government relief programs.
Stats show that 74 percent considered reducing their business contributions to ensure their employees have coverage. Yet, 53 percent contemplated no longer providing health care for their employees.
For this reason, entrepreneurs are hoping lawmakers will address the high costs with more solutions than problems. Specifically, they suggest lowering medical costs and expanding coverage for employees. Many anticipate seeing long-term fixes contrary to other government relief programs.
In March 2021, Congress passed the $1.9 trillion American Rescue Plan to help Americans through the pandemic. It is among the largest economic stimulus packages issued in U.S. history. The program consists of direct deposits in the amount of $1,400 and increased child tax credit, among other benefits. The plan was to lower or eliminate health insurance premiums for low and middle-class income earners and offer federal medical coverage through September.
