Health care costs plague small businesses

By BenefitsPro

By Kathryn Mayer

The cost of health insurance is what's keeping small employers up at night—still.

The latest National Federation of Independent Business survey reveals more than half of small business employers view the cost of insurance as their “most critical problem.”

Health insurance costs for small firms have risen 103 percent in the last decade, an increase outpacing wages and inflation, and rendering insurance unaffordable for many small-business owners, the survey finds.

“Fears over increasing health insurance costs continue to dominate the list of concerns for small businesses, very much in spite of the president’s health insurance reform law—certainly not an endorsement of the policy, nor a good sign for the future of the sector,” says Holly Wade, senior policy analyst and survey author.

The NFIB authors also note the PPACA has failed to address the “fundamental causes of rising health care cost while opting to focus on coverage.”

Still, the survey findings are nothing new, though: The cost of health insurance has been the top problem for small employers for the 25 years of the survey history.

Health care costs overshadow the No. 2 problem for small business owners—economic uncertainty—by 14 percentage points.

While many problems in the 2012 survey were also the same as they were in the 2008 survey, the major changes that occurred are largely related to the recession and increased regulations.

“This year’s survey was conducted on the heels of the worst U.S. recession since the 1930s, historically high levels of unemployment and housing foreclosures, and historically low levels of consumer confidence and hiring still plague the small-business community,” Wade says.

Among other top worries for small employers are gas prices, uncertainty over government actions, unreasonable government regulations and taxes. In fact, five of the top 10 most severe problems are tax-related.

The study was based on surveys of more than 3,800 small business owners.

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