Calif. Small Businesses Brace for Major Health Insurance Rate Hikes
Many small businesses in California are preparing to face significant hikes in health insurance costs, the Los Angeles Times reports.
Of the estimated six million Californians who work in small businesses, about half obtain health insurance through their employer.
Rate Hikes on Tap
According to a recent Times survey, most major insurers that serve California's small businesses intend to raise rates this year for firms with fewer than 50 employees. For the small business market, the survey found that:
- Aetna will raise average premiums by 18%, although some members could see hikes of up to 23%;
- Blue Shield of California will increase average rates by 18%, although some small businesses could experience rate hikes of up to 76%;
- Health Net said its members would see "low double-digit rate increases"; and
- Kaiser Permanente will raise average premiums by 12%.
UnitedHealthcare declined to release its rates.
Since small businesses have relatively few employees, the firms have little bargaining power to negotiate for lower health insurance rates or more comprehensive benefits.
Over the past 10 years, premiums for California small businesses have climbed by 180% cumulatively, compared with a 146% increase for larger firms, according to the California Employer Health Benefits Survey.
Possible Impact of Rising Health Costs
Small businesses say the higher health costs might prompt them to raise employee premium contributions, reduce benefits, cancel insurance programs or increase the price of consumer goods. Some firms say they are waiting to see how the new federal health reform law will affect their ability to provide coverage for their workers.
Economists and small business advocates have expressed concern that the rising health insurance costs could hinder small firms' abilities to expand and discourage new businesses from setting up shop in California. Advocates also worry that the high costs could spur California's small businesses to relocate to other states (Helfand, Los Angeles Times, 5/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.