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June 08, 2004
Small Businesses Making a Political Issue of Health Insurance
Small businesses employ about half of the nation's 115 million private-sector workers. Those same small businesses regard the ever-rising cost of health insurance as the primary threat to their survival. Together, those facts are producing what USA Today calls "a bumper year for political fights over small-business health costs."

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That's especially true in California, where business groups have forced onto the November ballot an initiative on whether to repeal the state's a new health-care law, known by its Senate bill number, SB2.

The law, signed by then-Gov. Gray Davis last October, doesn't go into effect until 2006. But opponents say that achieving SB2's goal--boosting the number of workers with health benefits by 1 million--will come at too great an expense to employers.

Meanwhile, according to USA Today, lawmakers in nine states have sought to lighten the load for their businesses by proposing to let them offer health insurance minus some of the costly benefits now required under state law, such as fertility treatments. Not having to meet those requirements will mean lower premiums for employers and employees alike, those lawmakers argue.

One such bill has been signed into law by Washington state Gov. Gary Locke. It gives small firms access to plans that don't include 12 of that state's 39 required benefits, such as chiropractic and eye care.

Opponents of removing mandates, including Gail Shearer, director of health policy analysis at Consumers Union, say stripped-down coverage may create more insured people, but they'll all have inadequate benefits.

And USA Today observes that none of these measures address the underlying problem: rampant health cost increases.

While double-digit increases have been the bane of all companies, they've especially hurt smaller ones. USA Today cites these statistics:

  • The Kaiser Family Foundation reports that last year, premiums jumped 15.5% for firms with three to 199 workers, as opposed to 13.2% for those with 200 or more. Last year was the fourth-consecutive year of double-digit increases.

  • Kaiser also reports that about 65% of small firms offered benefits last year, down from 68% in 2001. That's regarded as a sign of that an increasing number of small businesses are responding to higher premiums by dropping their coverage.

  • A recent membership survey by a trade group, the National Federation of Independent Business (NFIB), found that 65% of the 4,603 members surveyed regarded health costs are a "critical" problem, up from 47% in 2000.

USA Today reports that the debate over California's SB2 is getting extra attention for two reasons: California's reputation for starting trends that spread nationwide, and its status as the state with the most employers in the country. With 668,000 of them, it is home to one-eighth of the businesses in the country.

Beginning Jan. 1, 2006, SB2 will require California companies with 200 or more workers to offer health benefits to employees and their dependents. Employers will pay at least 80% of the cost, workers the rest.

Starting Jan. 1, 2007, companies with 50 to 199 workers must offer benefits to employees. They, too, must pay at least 80% of the cost. Unlike bigger outfits, they don't have to extend coverage to dependents.

As an alternative, companies of all sizes can skip benefits by paying a fee to the state that will go to a pool to provide state-subsidized health care.



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