As we near year-end, there is a lot being written about health insurance, the experience of small business owners and the impact of the Affordable Care Act on rates and access to health insurance. “As I talk to my colleagues that work with small businesses across the country, increasing costs and increasing regulatory burdens are a theme among small business owners,” said Steve Millard, President and Executive Director of COSE.
COSE works closely with the National Small Business Association (NSBA) on federal advocacy for small business. NSBA recently released the results from their 2015 national health care survey of small businesses that indicates that owners are continuing to struggle with health care costs.
“The national picture isn’t pretty, but the good news is that we are doing a little better here in Northeast Ohio than in other parts of the country. Prior to ACA, Ohio already had a pretty active and competitive marketplace for insurance benefits already in place,” said Millard. “And, with COSE and Medical Mutual allowing grandfathered and grandmothered plans, we’ve seen a high percentage of members staying in the plans they had just prior to the implementation of the Affordable Care Act. That’s been a benefit to them overall.”
Nationally, the survey indicated 90% of the more than 800 small businesses surveyed saw health care costs go up this year and one in five of them saw that cost increase by more than 20%. Additionally, cost was reported to be the biggest driver of whether a small business can even offer health insurance at all.
“Beyond the health insurance premiums, 55% of employers report additional health care related spending on average of $628 per month, per employee,” according to the report.
The report added the majority of firms offer a PPO insurance plan as well as dental benefits. Most small firms said they pay for more than half the cost of these benefits offerings. Further, just 9% of these firms said they plan to buy health insurance through the Small Employer Health Options Program (SHOP exchange) or an individual exchange, down from 14% from last year.
Dealing with fallout from the Affordable Care Act has also proved to be a challenge for small businesses. Sixty-eight percent of those owners responding indicate that they are the person with primary responsibility inside their business for taking care of the health benefit offerings. Unfortunately, that means they are spending a lot of time on the complexities of this issue. The report found the average time it takes per month for small businesses to keep up with ACA changes is 13 hours per month, which works out to about four weeks per year. More than half (51%) of respondents said they have limited or no understanding of how ACA is impacting their business.
Also, one in four small companies said they are purposefully not expanding because of potential ACA ramifications. The businesses responding to the survey said it costs them on average $1,116.05 per month to comply with ACA.
Other takeaways from the report include:
- While 69% of respondents to the survey continue to believe that offering health insurance benefits is important in recruiting and retaining quality employees for their business, just 41% of businesses with five or fewer employees surveyed offer health benefits, down from 46% a year ago.
- The total number of small businesses of all sizes surveyed that are offering health insurance dropped to 65% from 70% a year ago.
- One in 10 small businesses reported having to lay off an employee because of rising health care costs.
- Only 4% of small businesses said ACA is a factor in making health insurance easier or cheaper to provide to employees.
- Of those that do not offer insurance, almost 40% plan to do so in the next year citing the need to attract quality employees with quality benefits and compensation as a key factor in wanting to provide benefits to their employees.
This study was a national look based on a survey done by NSBA, a membership organization of small business owners. The environment in every state varies a bit as it relates to what kinds of coverages were available prior to ACA and what exists now. Nonetheless, the trend is that while the ACA has increased access to insurance, it has also increased costs and compliance concerns for small businesses. And, many small business owners have re-evaluated what they are providing employees.
COSE continues to look for new ways to help small business owners gain better access and compete with employee benefits. Millard recently provided an overview on what small businesses should be thinking about as it relates to 2016 health care costs. You can watch that video here.
The full NSBA 2015 Health Care Survey results can be found here.
Questions about your 2016 health care outlook? Contact your broker or the COSE benefits team at 440-878-5930.