Small businesses are facing a significant affordability crisis when it comes to providing health insurance to their employees, according to a new survey by the National Federation of Independent Business (NFIB).
The survey found that over half of small businesses currently offer health insurance, but a huge 44% do not. In fact, most small business owners reported finding it challenging to manage the cost of offering employer-sponsored health insurance, with almost half having taken a lower profit or suffered a loss to pay for premium increases over the last five years.
Who Is Affected?
The cost of business health insurance is by far the biggest challenge, with smaller businesses being more affected. Small employers compete for talent to fill open positions. Businesses are aware that health insurance is an important benefit for many employees and job seekers in the US, and not being able to offer health insurance puts small businesses at a disadvantage when hiring.
The survey found that businesses with more employees were far more likely to offer health insurance, with 89% of firms with 30 or more employees currently offering health insurance compared to 39% of those with 1-9 employees.
Among employers who do and do not currently offer health insurance, 94% of firms who currently offer health insurance believe it is important to some degree compared to 58% of firms who do not currently offer health insurance. The affordability crisis in health insurance for small businesses is a significant problem because it creates barriers for both employers and employees.
Why Is This A Problem For Small Businesses?
Employers who cannot afford to provide health insurance for their employees may struggle to attract and retain talent, leading to a less competitive workforce. While cost is the most reported reason for not offering health insurance, it is also a critical problem for those that do offer it.
The cost of health insurance has consistently been cited as the most significant challenge for small business owners.Small businesses often have limited resources, and the cost of providing health insurance can be a substantial burden on their finances. Many small business owners have reported having to take lower profits or even suffering losses to pay for the cost of health insurance.
Failing to provide adequate health insurance can have a detrimental impact on the financial stability of small businesses, making it difficult for them to invest in other areas, such as research and development or expansion. Ultimately, this can limit their growth potential and their ability to create jobs, which can negatively impact the local economy.
Why Is This A Problem For Employees?
Without access to affordable health insurance, many employees may go without coverage, leading to a higher risk of illness and financial hardship. Employees may struggle to access healthcare services if they cannot afford to pay for health insurance premiums themselves.
Additionally, the lack of health insurance coverage can lead to increased healthcare costs for both employees and small businesses, as employees may seek care only when they are extremely ill. This can lead to more expensive medical treatments and higher healthcare costs overall, on top of the health risks that delaying treatment may cause.