The Small Business Dilemma

How Rising Health Care Costs are Tough on Small Business

When it comes to health care, American small business owners are getting a raw deal.


Illinois PIRG Education Fund

When it comes to health care, American small business owners are getting a raw deal. While the current insurance marketplace offers some options to larger employers, it too often leaves small business owners on the outside looking in. They face unpredictable changes in costs, and far too often they are forced to choose between covering employees and the very survival of their businesses.

One crucial test of any health reform proposal is whether it offers a better deal to American small businesses. But the key Washington lobbies who claim to represent small businesses have been historically aligned with the political interests most opposed to reform. To more accurately reflect the diversity of views of small businesses on health care, the U.S. Public Interest Research Group has let small business owners to speak for themselves.

Three hundred and forty-three small business owners and managers across the country made their views heard through a survey which investigated the impact of health care costs on their businesses.

Survey Results:
Our efforts revealed that small businesses who do not currently offer coverage would overwhelmingly like to, but are stymied by high costs, complications and red tape. We discovered that those entrepreneurs who do make the sacrifices necessary to provide health care consider it less a moral obligation than a smart business strategy to increase employee productivity and attract and retain talented employees. Finally, we discovered that only a fraction of small business owners surveyed believed that their voices were being heard in the current health care debate.

• 78% of small businesses who do not offer coverage would like to do so.

• 80% of those owners who would like to offer coverage cite cost as a barrier

• 17% of those owners who would like to offer coverage say that they do not offer coverage because it is too complicated

• 55% of small businesses offering coverage do so to attract and retain good employees

• 27% of small businesses offering coverage do so to increase worker productivity

• Only 24% of owners surveyed felt that their interests were represented

Benefits of Health Reform:
Successful reform could yield serious benefits for small businesses and the country as a whole. Recent analysis by MIT Professor Jonathan Gruber, commissioned by the Small Business Majority, found that health reform would save up to 128,000 small business jobs that would otherwise be lost due to high health care costs. Achieving these benefits will require ensuring that health reform legislation has a mix of policies that work for small businesses, including health insurance exchanges, ending discrimination in issuance, renewal, and pricing of coverage plans based on health history, small business tax credits, and most importantly, a comprehensive push to reduce the growth in overall health care spending.