According to a recent survey conducted by the National Association of Professional Employer Organizations (NAPEO), after pay, health insurance is the most important inducement small businesses use to recruit and keep workers. Yet more than half the 365 small businesses in a recent survey said their premiums rose as much as 10 percent this year.
Almost one in 10 told the National Association of Professional Employer Organizations they would dump their health coverage next year or are unsure about it. “This is another wake-up call,” said Milan P. Yager, executive vice president of the trade association, called NAPEO. “Soaring health costs hit small businesses especially hard, and these businesses employ the vast majority of workers.
“So this is an extremely troubling development, not just for small businesses and their workers, but the entire economy.”
Around 1996, more small companies with fewer than 200 workers began offering health benefits. Then, from 2000 to 2005, the percentage dropped, says the Kaiser Family Foundation, from 68 percent to 59 percent – back to the same level as in 1996.
That’s stabilized in the last two years. NAPEO’s survey shows 71 percent will continue to insure their workers in the coming year – but another five percent remain unsure about continuing.
Professional employer organizations let small businesses outsource their complicated and time-consuming human resources chores, like doing payroll or administering health benefits, so owners can focus on making a profit.
NAPEO surveyed members’ clients in November and found that health care costs were their second-biggest worry after attracting workers.
Many of these companies said they will pass at least some costs along to employees next year. One in five said they would raise co-payments for office visits or deductibles; one in four said they’d raise premiums.
“Small businesses are the foundation our economy rests on,” said Greg Slamowitz, NAPEO’s president and co-CEO of the New York-based PEO Ambrose Employer Group LLC. “This survey is more evidence that sky-high health costs are starting to erode that foundation. And that should worry all of us.”
