Small Firms Hardest Hit by Health Coverage Costs

October 5, 2005 ( - Just over half of respondents in a new survey of the self-employed don't offer workplace health coverage and have no plans to add an office policy.

According to a survey of companies with 10 or fewer workers by the National Association for the Self-Employed (NASE), 13.8% of companies that grossed less than $50,000 annually offer health insurance compared to seven in 10 among those grossing more than $500,000 yearly.

“Every day, this group struggles with the increasing costs of health coverage for themselves, their families, and their employees,” said Robert Hughes, president of the NASE, in a news release. “This survey shows just how serious the problem is for micro-business owners and their employees, the lengths they must go to acquire coverage, and how great the need for realistic solutions to the growing health care crisis.”

Key survey highlights include:

  • Not surprisingly, nearly 62% cite cost as the single most significant barrier to offering health care to employees
  • Nearly seven out of 10 (68.9%) companies grossing between $50,000 and $99,999 annually currently do not offer health insurance through their business for their employees or themselves.
  • More than 85% reported that their health insurance premiums had increased in the past 12 months, with a median premium increase of 17.3%.
  • Spiraling health costs hit smaller companies harder. Micro-businesses grossing less than $50,000 annually spent a median of 18.7% of their gross 2004 sales on health insurance, compared to a median of only 2.3% spent annually by companies generating more than $500,000 annually.
  • The lowest incidence of an individual policy occurs among the smallest businesses, with only 26% of solo practitioners and 21% of companies grossing less that $50,000 having an individual policy. Younger respondents (those under 35) are far less likely to have their own plans, while women are less likely to have health coverage than men.
  • Overall awareness and appeal of HSAs is high across all segments, although most don’t take advantage of this option. More than 82% of respondents acknowledged having heard of HSAs, yet only 5.9% said they have established an HSA account. Nearly 65% of those who are uninsured expressed high interest in establishing an HSA versus 55.8% of those with an existing health care policy in place.

For complete survey results or to obtain a copy of the NASE survey report, contact Katy Dyer at 202-466-2100, , or John Stauffer at 202-223-4933, .