National Federation of Independent Business (NFIB)
December 4, 2007
The primary reason for the decline in the number of small businesses providing health insurance appears to be that owners of new firms are reluctant to introduce health benefits, according to a National Federation of Independent Business Small-Business Poll released today. The poll on purchasing health insurance found that 52 percent of small-business owners do not offer either employee health insurance or an insurance purchase subsidy.
“It’s much better for employee morale if a small-business owner never offers health benefits, than it is to offer them and then be forced to take it away because it is too expensive to continue,” said William J. Dennis, NFIB’s senior research fellow.
http://www.nfib.com/object/IO_35492.html
NFIB Small Business Poll:
http://www.nfib.com/page/researchFoundation
Comment:
By Don McCanne, MD
You know that we have serious problems with our health care financing system when a policy expert states that it is better for morale if new small business owners never offer their employees health insurance in the first place.
Small business owners are not to blame. The problem is the perpetuation of our health care financing method in which we use individual private plans for which premiums are set based on the actuarial risk of the collective members of the segregated risk pools. This is not only an expensive, administratively burdensome process, it also prevents equitable financing by allowing healthy and wealthy individuals to to escape into their own low cost pools, thereby relieving them of paying their full equitable share of pools that include those with greater health care needs.
Health care is now so expensive that most smaller start-up businesses can no longer afford to include health benefit programs for their employees. Just as adequate health insurance has become too expensive to enforce an individual mandate to purchase insurance, neither can an employer mandate be enforced. The amount that an employer or an individual or family pays for private insurance is determined by the full actuarial value of the benefits of the individual/group plan pool plus the high administrative costs that cannot be avoided in a fragmented system of financing health care. That creates a mismatch between the premium charged and the ability to pay for it.
There are those who insist that we could leave in place the private plans and achieve equity through various tax supports designed to match the premiums charged to the ability to pay, even if it does perpetuate the administrative waste. As government tax support increases, compliance improves, but you will never have 100 percent coverage with full participation by those who are healthy until the tax support covers the entire premium and enrollment is automatic (but then why would you continue to tolerate the administrative waste?). Though some would suggest that we could allow individuals to opt out, those supporting mandates to purchase plans realize that the healthy must be included in the collective risk pools for insurance to work.
If really we do want health care to be affordable for individuals and businesses of modest means, we need to do away with the private plan model and replace it with an equitably funded risk pool that covers everyone – a single payer national health program.