Question
Will the candidate protect small businesses from high health care costs?
The Issue
Because small businesses don’t have as much buying power as large companies, small business owners often struggle to find affordable health coverage for themselves and their employees. As a general rule, the smaller the business, the harder it is for the business owner to find and keep affordable coverage. This is due in large part to the very nature of small businesses: They have fewer employees, and therefore they have fewer people over whom to spread the risk of illness if an employee gets sick. If even one person employed by a small business has an illness or is getting older, the insurance premiums for the whole company will likely increase. As a result, less than half (45 percent) of companies with fewer than 10 employees offer health insurance to their employees. In contrast, the vast majority of companies with more than 50 employees (95 percent) offer health coverage.26
With health care costs becoming a growing burden, small business owners are forced to make tough decisions about employee benefits. As health insurance premiums rise, employers have three options to contain their costs: They can pass premium increases on to their workers, cut back on the benefits that their plans cover, or stop offering coverage entirely. Small business owners have been forced to do all three of these things in recent years, and as health care costs rise, this trend is likely to continue. Because nearly one in five working Americans is employed by a company with fewer than 20 employees,27 making it easier for small businesses to purchase insurance for their workers is essential to ensuring that all Americans have access to quality, affordable health coverage.
The Positions
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Senator McCain: Senator McCain’s health care plan does not create new ways for small businesses to extend affordable coverage to their workers. His health care plan also does not prohibit insurance companies from increasing premiums for an entire group of workers if one or two employees in a small business are older or fall ill. |
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Senator Obama: Senator Obama’s health care plan creates a National Health Insurance Exchange that includes new coverage options that small businesses can purchase and offer to their employees. These new plans will be prohibited from raising the insurance premiums of an entire group when a few workers are older or get sick. In addition, Senator Obama’s health care plan offers a tax credit to small businesses that will cover up to 50 percent of employee premiums for health coverage.28 His health plan also creates a new safety net (called reinsurance) to protect everyone—insurers, as well as small businesses and their employees—when an employee has unexpectedly high health care costs. |
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Footnotes
26 Kaiser Family Foundation and Health Research and Educational Trust, op. cit.
27 Families USA calculations based on U.S. Census Bureau, Statistics about Business Size (Including Small Business) from the U.S. Census Bureau, "Table 2a. Employment Size of Employer and Nonemployer Firms, 2004," available online at http://www.census.gov/epcd/www/smallbus.html, accessed on July 9, 2008. |
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