In this era of rapidly rising health care premiums, cost continues to be the most important factor cited by small employers as the reason they do not offer health insurance (Exhibit 2.4).
Seventy-six percent of small firms (3-199 workers) that do not offer coverage cite high premiums as a very important reason for not doing so.
Other factors cited by small employers as very important reasons for not offering coverage include: the firm is too small (56%); employees are covered elsewhere (36%); firm can attract good employees without offering health insurance (23%); and administrative hassle (14%).
Although cost is often identified as the primary reason that many small firms do not offer health benefits, their decisions may also reflect their views about their employees’ preferences for wages over health benefits. When nonoffering employers were asked to assess whether their employees would prefer an additional $2 per hour in wages (approximately the average cost of health insurance per worker) or health benefits, nearly 80% answered that their employees would prefer higher compensation rather than receiving health benefits. This suggests that even a significant upturn in the economy may not move the small firm offer rate significantly higher.
Despite significant premium increases in recent years, very few employers indicate that they are likely to drop coverage or restrict eligibility for benefits in the near future.
Less than one percent of employers said that they were very likely to drop coverage in the next two years, and only six percent indicated that they were somewhat likely to drop (see Section 12). Similarly, only two percent of employers said that they were likely to restrict eligibility for benefits in the near future, with an additional eight percent indicating that they were somewhat likely to do so.
Section 2: Health Benefits Offer Rates, 2003 Pages: 12 3 4< previous | next >
