Higher Health Insurance Rates Growing Problematic for Businesses?

Small business owners who provide health insurance coverage to their workers have likely noticed that their costs for doing so have skyrocketed in the past decade. That trend seems likely to continue, too, under the Affordable Care Act, but insurers may be poised to help out a little bit.

Health insurance premiums have risen some 80 percent since 2003, with the cost to workers becoming more substantial as a result of wages and inflation climbing just 31 and 27 percent, respectively, during that time, according to the latest Employer Health Benefits Survey from the Kaiser Family Foundation/Health Research and Educational Trust. Further, companies that tend to employ a larger number of low-wage workers (with at least 35 percent of their employees making $23,000 or less) also make those people pay more for their families’ coverage than those at companies with more workers making a better salary, by $1,363.

However, it’s important to note that the most recent rate increases were more in line with historical norms, the report said. This may indicate that the ACA could already be having a positive impact on the ways in which these costs can grow for small businesses and consumers alike.

“We are in a prolonged period of moderation in premiums, which should create some breathing room for the private sector to try to reduce costs without cutting back benefits for workers,” said Kaiser President and chief executive officer Drew Altman.

At the same time, more businesses of all sizes seem to be finding other ways to reduce their healthcare costs, such as by getting more involved with wellness programs, the report said. This year, some 35 percent of all employers say that these plans can help to limit and control premium costs. These are considerably more popular among employers with more than 200 workers (of which nearly all have at least some sort of plan along these lines), but similar, if smaller-scale programs could also be effective for independent companies with fewer employees.

Owners who want to get a better handle on their coverage costs overall, perhaps as a means of making their health coverage more affordable, may want to look into ways to cut their costs for small business insurance policies including those for both workers’ compensation or liability insurance. Doing so may give them added flexibility to explore more health options that can benefit their workers.