States and Small Business Health Insurance: An Overview
Updated: June 23, 2008
Small businesses often pay more for employee health benefits because they don't have the buying power of big employers. As both workers and small employers feel the financial squeeze, fewer are able to afford to offer, or purchase, health insurance coverage.
Here is how USA Today summarized the issue in a page one story in April:
Small businesses are driven crazy by soaring employee health costs, an expense that surveys show has become the biggest headache and obstacle to growth. Now, a growing army of consultants and benefits experts are promoting new health plans and services aimed at owners desperate to rein in costs.
Insurance brokers customize plans for small firms. Insurers cut deals for owners launching on-the-job worker "wellness" programs. Professional employer organizations combine dozens of small firms into big employee groups for discounted rates. And Health Savings Accounts (HSAs) crafted by Congress are now part of small firms' arsenal.
Congress (in March 2006) moved closer than ever to passing health care legislation to let small companies band together across state lines for discounts. President Bush endorsed the legislation again last week. But it's been debated for years without passage.
[USA Today, 4/19/06]
For state policymakers, there is more to the story. The percentage of the non elderly population (under age 65) with health insurance coverage declined in 2004 to a post-1994 low of 82.2 percent. However, it is the smallest of "small employers" that provide coverage least often - 72 percent of those with 10 to 24 employees, and only 47 percent of those with three to nine employees.
For policymakers seeking responses, some of the following resources may be of use. Note that fairly diverse strategies have been tried and proposed. These include:
* Health Savings Accounts (HSAs) and High Deductible Health Plans.
* Consumer-driven health insurance strategies such as cost and quality transparency.
* Exemptions or exceptions from state mandates.
* Tax credits and tax deductions for insurance costs.
* State Health Purchasing Pools or Cooperatives.
* MEWAs (Multiple Employer Welfare Arrangements) and AHPs (Association Health Plans).
* State High Risk Pools.
* Public-Private Partnerships, including subsidies.
* Universal health plans that emphasize small employer coverage.
* Small Group Insurance Reforms.
small pool paying in, cost more .... 
