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Study finds economic burden of health insurance increasing for small employers
Date:4/4/2008

The economic burden of providing health insurance for workers increased more for small businesses than for large ones from 2000 to 2005, but the spike did not cause a significant number of small employers to abandon the benefit, according to a study issued today by the RAND Corporation.

Small businesses (those with 25 or fewer employees) saw the expense of providing health insurance rise by nearly 30 percent during the study period -- significantly more than the hikes experienced by medium and large businesses examined by the study.

Researchers found no evidence that small businesses were more likely than large employers to quit providing health insurance for their workers, although small employers did remain less likely to provide health benefits to workers.

Perhaps these small businesses -- and ultimately, their employees -- were willing to accept the burden of rising health insurance costs, even if it meant giving up wage increases, said Christine Eibner, author of the study and an associate economist at RAND, a nonprofit research organization. What we dont know is whether small companies and their employees will continue to make this tradeoff.

The study from the Kauffman-RAND Institute for Entrepreneurship Public Policy explores trends in the economic burden of providing health insurance, the distribution of the burden for small and large businesses, and the quality of the health plans businesses offered.

Eibner examined more than 2,500 small, medium and large companies surveyed from 2000 to 2005 by the Employment Cost Index, a quarterly summary of businesses, and the Employee Benefits Survey, a periodic survey of employer health plans. Both surveys are conducted by the U.S. Bureau of Labor Statistics.

Eibner found that typical businesses offering health insurance spent between 7 percent and 10 percent of their payroll on health insurance. But small companies saw their share grow from an average of 8
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Contact: Lisa Sodders
media@rand.org
310-451-6913
RAND Corporation
Source:Eurekalert

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