In today’s economic climate, small employers are at a significant disadvantage compared with large employers, and the uphill battle small firms face in providing health insurance to their workers only adds to their problems. According to a new report funded by the Robert Wood Johnson Foundation, high administrative costs and limited ability to spread risk result in small businesses paying substantially higher premiums than their larger counterparts for the same benefits.
Urban Institute researchers Linda Blumberg and Stacey McMorrow conclude that the health insurance exchanges proposed in both the House and Senate bills, along with associated insurance market reforms, will substantially improve the ability of small employers to obtain affordable coverage. Additional financial assistance in the form of subsidies to low-income individuals will further enhance affordability for small-firm workers. Tax credits for employers who are purchasing coverage, however, are temporary and thus likely to have modest effects.
The report also looks at the requirement that employers “play or pay”—either provide coverage for their employees or pay an assessment to the government. The authors clearly explain differences in the House and Senate bills on these provisions as well as new tax elements, demonstrating that none would impose substantial financial burdens on small employers.