New York, NY, November 1, 2012—Only 49 percent of workers in small businesses with fewer than 50 employees were offered and eligible for health insurance through their employer in 2010, down from 58 percent in 2003. In contrast, 90 percent of workers in firms with 100 or more employees were offered and eligible for health insurance in both 2003 and 2010, according to a new Commonwealth Fund report.
The report finds that as health insurance coverage eroded in the years before the passage of the Affordable Care Act, workers in small firms struggled with health care costs. Forty-five percent of small-business employees reported trouble paying medical bills in 2010, and 46 percent reported that they skipped needed medical care because of cost. In contrast, one-third (33%) of workers in firms with 50 or more employees reported problems paying medical bills, and 35 percent did not get needed medical care because of cost.
Low-wage workers in small businesses were the least likely to be offered and eligible for coverage: just one-third of workers making less than $15 an hour in small firms were both offered and eligible to enroll in their employer's health plan, compared to 70 percent of small-firm workers making over $15 an hour.
The report, Jobs Without Benefits: The Health Insurance Crisis Faced by Small Businesses and Their Workers, by Commonwealth Fund Senior Research Associate Ruth Robertson and colleagues, is based on findings from The Commonwealth Fund's 2010 Biennial Health Insurance Survey and analyzes the health insurance and health care experiences of workers according to workplace size and income. It found that workers in larger firms, with 50 or more employees, were more likely than workers in small businesses to have access to affordable health insurance and health care, and their health care coverage had not eroded over time.
The Affordable Care Act Offers Help for Small Businesses
According to the report, elements of the Affordable Care Act that seek to lower the financial burden for small businesses offering health insurance to employees are already making a difference. For the tax year 2010, 170,300 businesses with fewer than 25 employees and average wages of less than $50,000 claimed premium tax credits, covering 770,000 workers; that number is projected to more than double for tax year 2011, with 360,000 businesses claiming tax credits, covering 2 million workers. In addition, workers are seeing some premium cost relief, as 3.3 million small-business employees and their families received $321 million in rebates this year when their health insurers didn't spend at least 80 percent of their premium dollars on medical costs as opposed to overhead or administrative costs.
Looking forward to 2014, the report estimates that most of the 27.6 million uninsured workers with low and moderate incomes in small and large firms will be eligible for subsidized private health insurance through the new state-based health insurance exchanges or through Medicaid. The report's authors point out that the Affordable Care Act is designed to target those workers who the report identified as most vulnerable—low-wage workers in small businesses who can't afford the health insurance and health care they need—and will likely level the playing field between high- and low-wage workers.
"Workers and business owners, particularly those in smaller companies who make a lower wage, were in an untenable situation where their health and financial security were at risk due to rising costs and inadequate health insurance coverage," said Commonwealth Fund President Karen Davis. "The Affordable Care Act is targeted to address their needs as expanded health insurance options and support for those who can't afford the premiums will assure that people have access to secure, affordable, comprehensive health insurance whether they work for a small or large employer."
Additional Report Findings:
- Low-wage workers are more likely to report skipping needed health care due to cost, and also to report higher rates of medical bill problems, compared to higher-wage workers. In 2010, 54 percent of low-wage workers in small businesses skipped needed health care because of cost, compared to 34 percent of higher-wage workers. Low-wage workers also reported higher rates of medical bill problems, with 52 percent in small firms and 48 percent in large firms struggling with medical bills.
- Buying insurance on their own is often not a viable option for workers who cannot get health insurance through their employer: of workers who shopped for plans on the individual market, 34 percent found it very difficult or impossible to find the type of coverage they needed; 55 percent found it very difficult or impossible to find an affordable plan; and 28 percent were turned down, had a health condition excluded, or were charged a higher price based on their health.
- Workers in small firms were more likely to be dissatisfied with their health insurance, with 29 percent rating it fair or poor, compared to 16 percent of those at larger businesses.
- Workers in larger firms had more choice when it came to selecting a plan—66 percent reported having two or more to select from, while only 36 percent of workers in small firms reported having a choice of plans.
Data for this study were drawn from the 2010 Commonwealth Fund Biennial Health Insurance Survey, a nationally representative survey of adults age 19 and older. Conducted by Princeton Survey Research Associates International from July 14 through November 30, 2010, the survey consisted of 25-minute telephone interviews in either English or Spanish with a random, national sample of 4,005 adults living in the continental United States. This issue brief is based on the responses of 1,609 adults ages 19 to 64 working full or part-time, who are not self-employed. The survey has an overall margin of sampling error of +/− 1.9 percentage points at the 95 percent confidence level. We also report estimates from the 2003 and 2005 Commonwealth Fund Biennial Health Insurance Surveys.