Issue 2: September 2002

Are Health Insurance Premiums Higher for Small Firms?

Small firms are much less likely than large firms to offer health insurance coverage. Analysts point to higher costs of coverage as one reason for the lower offer rate. To address this, policy-makers have developed a range of strategies to bring small firm health coverage costs more in line with the costs faced by larger firms. But are small firm costs really higher, and if they are, what are the reasons?

Some Key Questions Addressed in This Issue:

• Are the administrative costs of health insurance higher for small firms?
• Do benefits mandated by states increase insurance costs for small firms?
• Have purchasing pools reduced small firms' premium costs?

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