Newer Businesses Less Likely to Offer Health Benefits

May 6, 2008 ( - New research issued by the Kaiser Family Foundation finds that the age of a business is directly related to the likelihood it offers employees health insurance.

The analysis looked at smaller businesses and Kaiser said the likelihood that a small establishment will offer health insurance varies considerably by the number of employees, so it divided companies into three size categories (fewer than 10 workers, 10 to 24 workers, and 25 to 99 workers). Kaiser found that within each size category, the percentage of establishments offering health benefits clearly increased across the business age categories.

For the 2005 year, for example, the analysis showed that for establishments with fewer than 10 workers, 43% of establishments with a business age of 20 or more years offered health benefits, compared to 37% of establishments with business ages between 10 and 19 years, 32% of establishments with business ages between 5 and 9 years, and 24% for establishments with business ages of fewer than 5 years.

In addition, Kaiser found the number of younger businesses offering health insurance to employees fell more quickly than the eldest business category for all three size groupings from 1999 to 2005. (See Study Finds Employees in All Demographics Losing Health Coverage )

The Foundation said these findings suggest that policymakers interested in boosting health benefit offer rates may want to give special focus to the issues faced by smaller businesses starting up or in the early years of operation.

The analysis is based on data from the Insurance Component of the Medical Expenditure Panel Survey (MEPS-IC), conducted annually by the Agency for Healthcare Research and Quality.

The report, “Offer Rates for Smaller Establishments by Business Age,” is part of the Kaiser Family Foundation’s Snapshots: Health Care Costs series. The report is here .