Posted on September 15, 2005

Fewer Small Businesses Offer Employees Health Insurance, Survey Finds

With the cost of providing health insurance to employees continuing to outpace inflation and wage growth, the percentage of businesses offering such insurance has declined steadily over the past five years, a new survey from the Kaiser Family Foundation and Health Research and Educational Trust finds.

According to the study, 2005 Annual Employer Health Benefits Survey, 60 percent of firms offered workers health coverage in 2005, down from 66 percent in 2003 and 69 percent in 2000. The study also found that while 98 percent of businesses with two hundred or more employees offer health benefits to employees, the percentage of small businesses offering such benefits is much lower. "It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer-based health insurance system," said Kaiser Family Foundation president and CEO Drew E. Altman.

On a somewhat brighter note, the survey found that health insurance premiums increased an average of 9.2 percent in 2005, down from 11.2 percent in 2004, the first single-digit increase after four consecutive years of double-digit increases. Nevertheless, the rate of growth in employee premiums is still more than three times the growth in workers' earnings (2.7 percent) and two-and-a-half times the rate of inflation (3.5 percent). Since 2000, premiums have risen some 73 percent.

"While premium increases slowed this year, they continue to rise much faster than inflation and other economic indicators," said Health Research and Educational Trust president Mary A. Pittman. "As a result, workers and businesses alike are finding it harder to afford health coverage."

To read or download the complete report, visit: http://www.kff.org/insurance/7315/sections/index.cfm.