Health Insurance Affordability

Health insurance is expensive and getting more expensive, particularly for small businesses.  Small business accounts for most jobs in the US and for much of the job growth.  These companies have been socked with one cost increase after another in recent years–labor costs, utility costs, taxes, interest rates and so on.  At some point they simply can’t raise their prices enough to offset these cost increases or they lose customers.  The Wall Street Journal earlier this week had an article about restaurants closing because they simply make the cost/price formula work.  A survey from eHealth, which arranges health insurance for small businesses and individuals, finds that the cost of health insurance is adding to their stress.    (EH Survey)

The respondents say that hiring good workers remains hard and that health benefits help attract and retain employees, but that any significant increase in health insurance costs makes it unaffordable.  Of those small employers who don’t currently offer health insurance, the cost is the primary reason.  Health insurance costs small employers more because the per employee cost of marketing to and administering small group coverage is higher, and the risk isn’t spread across as large a population pool.  Health care costs are growing and that growth will accelerate this year so it is likely that health insurance premiums will go up as well.   Policymakers refuse to adopt tactics that could reduce the cost of health care so don’t expect any relief soon.