Small Businesses Want Affordable Insurance

In his speech to Congress, President Obama said bringing health care costs down would be a big step toward fixing the nation's economy. Small business owners are among the most eager for some kind of action. For them, the recession makes it even tougher to offer health insurance.

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STEVE INSKEEP, host:

In his speech last night, President Obama argued that bringing down health care costs would be a big step toward fixing the economy.

President BARACK OBAMA: This budget builds on these reforms. It includes a historic commitment to comprehensive health care reform, a down-payment on the principle that we must have quality, affordable health care for every American.

INSKEEP: That's the president speaking last night. Small business owners are among the most eager for some kind of action. NPR's Joanne Silberner reports that for small businesses the recession is making the already tough job of offering health insurance even tougher.

JOANNE SILBERNER: In Boca Raton, Florida, small business owner Bobra Bush used to have it pretty easy.

Ms. BOBRA BUSH (Owner, Telecom Corporation and Telcare Corporation): My coverage from a couple of years ago was a standard group policy and it cost me five or 10 dollars to go to the doctor and that was pretty much it.

SILBERNER: Bush owns two small telecom companies. She has one full-time employee. She pays all of her own premium and half of that employee's premium. With the recession, business is not so good.

Ms. BUSH: Revenues are down over 50 percent from 2008.

SILBERNER: Bush renewed her health insurance last September. With hard times ahead and facing a big price increase in her conventional policy, she switched to a high-deductible policy.

Ms. BUSH: This particular plan is a $1500 deductible, so we have to pay the first $1500 and then it kicks in and it's 100 percent after that.

SILBERNER: Even with no help for doctors visits until she's spent that $1500, her insurance costs are still 23 percent higher this year than last.

Ms. BUSH: It's going to cost us close to $10,000 this year for the two of us for insurance.

SILBERNER: Bush has been whittling away at her insurance policy for years, increasing the deductibles and co-payments in order to keep the price down. With the recession, small businesses are doing that more and more, says Michelle Dimarob. She's head of legal affairs for the National Federation of Independent Business, which represents small businesses in Washington.

Ms. MICHELLE DIMAROB (National Federation of Independent Business): What you're seeing is a lot of creative shifting going on, so maybe you've got employers who are starting to increase deductibles, or maybe they're increasing co-payments, or they're sharing more between the employee/employer cost share.

SIBERNER: But some small businesses are dropping health insurance altogether. Just how many won't be known until later this year. The dropout rate has been one to two percent a year. Most small business watchers suspect it will creep up. Again, Dimarob of the NFIB.

Ms. DIMAROB: I think what used to be a poke, where you would sort of see premium increases and you'd try to figure out what you were going to do to offset those or, you know, to shoulder them, now that poke is pushing you over the cliff.

SILBERNER: Alexis Coates made the big decision last March to stop offering health insurance to his employees at dEVNIX, a small data management company in Baltimore. He lost an especially valued employee, his best assistant.

Mr. ALEXIS COATES (Small Business Owner): This assistant I've had for three and a half years. She went six months without health care and she was like - she asked me, she said, Do you mind if I look for a job? She said, I really need health care. It hurt me to my heart (unintelligible) to let her go.

SILBERNER: He's competing for employees with the giant companies that can afford full benefits.

Mr. COATES: If we want to continue to compete long-term and keep employees, we have to offer health insurance.

SILBERNER: But with business down 40 percent, he just can't do it. The recession is likely to have some collateral damage as well, says Michelle Dimarob of NFIB - people who've lost their jobs and are thinking about starting their own small businesses.

Ms. DIMAROB: And they are going to find themselves in a position where when they start to look around to purchase insurance, that the marketplace that they're going to purchase in is very different than the marketplace where they were working in.

SILBERNER: Dimarob says they may be in for a surprise when they check out their health insurance options. According to study a few years ago by the Commonwealth Fund, small businesses pay 18 percent more for insurance. Self-employed people can pay a lot more than that. For years, NFIB has sought to allow small businesses to join together and buy into large plans in order to reduce costs. And the organization would like small business owners to get the same tax benefits for health insurance that big businesses get.

While President Obama did not go into detail about how to reform the insurance market, he has suggested setting up a national low cost health plan that small businesses could buy into.

Joanne Silberner, NPR News.

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