Small business owners divided on health care reform options

Nine out of 10 small business owners say it is important that health care reform offer choices in plans but many worry that change will bring increased costs (71 percent) and unnecessary complexity (56 percent), according to a survey TriNet recently conducted of more than 200 small businesses across the country.

“Health care is already a significant expense for small business owners,” said Burton M. Goldfield, TriNet’s president and CEO. “These results confirm what we hear from our small businesses clients: entrepreneurs want choices when it comes to health care programs, but their success will be hampered if reform results in annual double-digit cost increases and administrative nightmares that divert their focus from growth and revenue.”

TriNet, which releases human resources surveys on a quarterly basis to gauge trends among small businesses, learned that nearly 63 percent of the respondents said their health care costs rose between 6 percent and 20 percent in the last year. Of the respondents (90 percent) who pay at least a portion of health care premiums for their employees, 76 percent said health care insurance consumes between 1 percent and 10 percent of business revenues with 15 percent saying health care costs 11 to 20 percent of total revenues.

Among those respondents who think the costs of health care will increase with reform, 44 percent indicated they might reduce the level of benefits coverage to offset the added costs. The next largest group of respondents said they would look to reduce employee salaries and wages (21 percent) or staff levels (20 percent) to cover additional expenses.

When asked who should pay for health care insurance for employees of small businesses, 56 percent said it should be split between employers and employees, while 30 percent believe the government should also share the burden with employers and employees. If the government were to play a role in providing assistance to small businesses, 44 percent would like to receive tax credits for their business while 30 percent would prefer subsidies for a portion of the costs.

While 90 percent said they want a choice in plans, respondents were divided on what options reform should offer; 34 percent think options should include preferred provider organizations (PPOs) while 22 percent want universal programs run by the government and funded by business and personal income taxes.

As an advocate for small businesses, TriNet encourages Congress to not discard efforts that assist in keeping health care costs down, including cost transparency, preventive care and employee responsibility. Further, small businesses benefit when they have the option of meeting their HR needs through a single source.

“Just as people don’t want to visit multiple supermarkets to purchase cheese, meat and bread, small companies often want to work with a single vendor to obtain human capital needs such as benefits, payroll and workers compensation,” Goldfield added.

According to the survey, small business owners are turning to one another (20 percent), Professional Employer Organizations (PEO) (16 percent) and Chambers of Commerce (13 percent) as sources of information about health care reform. Only 3 percent consider the government as a source of information they would turn toward for guidance regarding the reform.

http://www.trinet.com/documents/white_papers/TriNet_WP_2009_HRTrends_Q3.pdf.