Health care costs threaten the future of small businesses that survive COVID
Crises — and the past year has delivered them in droves — have a way of both spotlighting problems and increasing receptivity to a broad range of solutions. Necessity, it appears, is the mother of reflection. In what has already been a tumultuous time for America’s job creators and while the vaccine deployment brings glimmers of hope, another catastrophe looms.
The impact the rising costs of health care — health expenditures reached $3.8 trillion in 2019 and are expected to rise to $6.2 trillion in seven years— are having on Main Street is a serious threat to our economy and society. In fact, a national survey of more than 800 small business owners, conducted by Small Business for America’s Future, found that desperate small business owners are being crushed by health care costs and overwhelmingly demand government action to relieve the burden.
As an example of how bad the problem is, the survey found that 55 percent of small business owners say the cost of providing health insurance to their employees is the biggest challenge they face. And here’s the kicker: the difficulty of insuring workers surpassed taxes, corporate competition and even COVID-19.
Half of survey respondents report providing health insurance as a benefit. Seventy-six percent of the small business owners that do not provide insurance say it’s because the cost of doing so is too high. An alarming 53 percent of small business owners who do offer insurance say they have considered dropping it because of the costs — not surprising when nine in 10 survey respondents said their health insurance costs increased over the past four years, with 40 percent responding that costs have risen by 10 percent or more a year.
The findings reflect long-standing imbalances in the market that favor large businesses and corporations — imbalances that small business owners have been seeking to rectify for decades. Unlike big players, small businesses cannot spread risk over thousands of employees, more closely control health insurance costs by self-funding their group health plans, negotiate for lower rates or fold administrative costs into large human resources departments. The result is that small business owners pay more, have fewer choices and have to take time away from running their day-to-day operations to manage their plans. It’s as if the U.S. has instituted a surcharge just for being small.
It’s not surprising that nine in ten of small business owners say that the Biden-Harris administration must prioritize bringing down health care costs. In fact more respondents (51 percent) are concerned that the Biden-Harris administration and Congress would not go far enough in acting to bring down health care costs than the number (33 percent) who were concerned they would go too far.
Clearly, small business owners are desperate for a solution to the high cost of health care. Every measure Small Business for America’s Future tested to bring down costs won overwhelming support. Eighty-seven percent support capping out-of-pocket patient expenses, 85 percent support limiting the price charged by hospitals with high payment rates, and 69 percent support giving everyone the option to buy into a government-run health plan like Medicare, also known as a public option.
This may be why small businesses’ support for a public option seems to be becoming a trend. A 2019 poll by GQR for Public Private Strategies and a Small Business for America’s Future survey in 2020 both found strong small business owner support for allowing employees to buy into Medicare or another government-administered health plan.
The results of this small business survey are a cri de coeur, and our elected officials must respond by examining all health care reform options. Small businesses are, after all, the communal and economic lifeblood of our nation, whether urban, rural or suburban. There are 30.2 million small businesses in the U.S, according to the Small Business Administration, and they employ 60 million people. Indeed, 99.9 percent of all businesses are small businesses, and collectively they create 66 percent of new private-sector jobs.
How much more could they do if freed from the crippling costs of health care in a market skewed against them? How many more workers would look more favorably on working for a small business if health care coverage, or the lack of it, wasn’t a determining factor?
Health care costs are causing small businesses immense financial pain and as a result they are open to a broad set of solutions. It’s time policymakers take decisive action to help our Main Street entrepreneurs and consider all options to bring down costs.
Dr. Erika Gonzalez is co-chair of Small Business for America’s future, CEO, President, & Co-Founder of South Texas Allergy and Asthma Medical Professionals (STAAMP) and STAAMP Clinical Research and Chair of the San Antonio Hispanic Chamber of Commerce.