Curing Small-Business Health Insurance Woes

Small businesses’ health-insurance woes have been getting some attention the past couple weeks, and raising hopes that the Obama administration will soon do something about them.

A new Government Accountability Office report finds that the small group health-insurance market – generally defined as covering businesses with up to 50 employees – has become much more concentrated among fewer insurers.

The GAO report analyzed 39 states’ health-insurance markets and found that in 34 of the markets, the top 5 insurance carriers accounted for more than 75% of the small-group market, compared with 26 states among 34 analyzed in 2005 and 19 among 34 states in 2002. What’s more, the median market share of the largest small-group insurer in each market increased to 47% in 2008, up from 43% in 2005 and 33% in 2002.

The worry, of course, is that more concentration leads to less competition and will only exacerbate price increases for small companies, which have experienced double-digit increases annually in recent years. Many small employers have dropped health insurance altogether, with now only about half offering it, according to recent studies.

Earlier this week, the National Small Business Association launched a new Web site – www.HealthReformToday.org – highlighting the health-insurance problems small businesses face. The site compiles news and studies with health-insurance information and statistics pertaining to small companies. It also includes testimonials from business owners who’ve struggled to afford coverage, or dropped it, and links to current health-insurance-related legislation.

Last week, at a House Small Business Committee hearing, members discussed health-care reform and plans to tackle it in President Obama’s budget. Nydia Velazquez said they were confident the issue would be addressed soon, but says it’s vital the government consider the unique needs and challenges of small businesses. “The needs of small firms and small medical practices are different from those of big companies, and it is critical that we not push forward with one-size-fits-all reform,” Rep. Velázquez said in a statement. “If it is properly crafted, health-care reform will be a relief to small providers and to small firms, bringing greater efficiency to the system and reducing costs for all Americans.”

Readers, are you hopeful health-care reform is soon on the way? What could be done to help small businesses in particular?

Photo: Associated Press

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