SMALL BUSINESS: Health Insurance Coverage Drops
The number of businesses with fewer than 200 employees offering health insurance to their workers is on the downswing, from 59% in 1996 to 54% in 1998, according to a new study from the Kaiser Family Foundation, conducted by KPMG Peat Marwick. Concurrently, the percentage of employees of small businesses receiving job- based coverage fell from 52% in 1996 to 47% in 1998. The decrease coincided with continued economic growth, but also with rising health insurance premiums. Premiums for small businesses climbed 5.2% between 1997 and 1998, compared to a 1.8% increase the year before. The National Federation of Independent Businesses also released a report yesterday showing that "only 30% of companies with fewer than six workers provided coverage, compared with 90% of companies with 26 to 90 workers" (Hamilton, Washington Post, 2/24).
Left Out of the Boom
The Kaiser report noted that small business typically accounts for "more than three-quarters of job expansion," and more than "40% of all employees work in firms with fewer than 100 employees or are self-employed." The study found that the decrease in insurance coverage was most severe in firms with 25 to 49 workers, where coverage fell from 66% to 55% between 1996 and 1998, and that the same period saw a shift away from HMOs toward POS plans -- which covered 30% of small business in 1998, up from only 7% in 1996 (report, 2/23).