NCPA - National Center for Policy Analysis

Fewer Small Firms Offering Health Insurance to Workers

September 6, 2002

Insurance premiums covering workers' health plans have become so expensive that a number of small companies have abandoned the benefit, according to Kaiser Family Foundation data. The trend is sure to increase pressure for a national health insurance program, experts warn.

  • Forty-five percent of employers with three to nine workers now offer no health benefits -- up three percentage points from 2001.
  • That amounts to almost 150,000 more workers and dependents without coverage.
  • Health insurance premiums soared 12.7 percent -- roughly eight times the overall inflation rate -- in the 12 months ended this spring.
  • That was the largest one-year increase since 1990 -- and signs indicate even higher premium rates next year and beyond as costs for medical care and prescription drugs rise.

Small businesses faced even higher premium increases -- exceeding 14 percent for employers with fewer than 50 workers.

Single workers are paying an average of 27 percent of their premium, or $454 a year -- while families pay an average of 16 percent, or $2,084. But wages rose only 3 to 4 percent.

Source: Milt Freudenheim, "Small Employers Severely Reduce Benefits," New York Times, September 6, 2002.


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