The Kauffman-RAND Institute for Entrepreneurship Public Policy announced results from a study that examined the impact of rising healthcare costs on small business. The study found that half of all small businesses that offer health insurance spent more than 10 percent of their payroll on this benefit, “further illustrating why healthcare costs have been the No. 1 concern for small-business owners and their employees for the past 20 years.”

The Kauffman-RAND Institute report, authored by Drs. Susan M. Gates and Christine Eibner, found that small firms with fewer than 25 employees have been significantly impacted by increases in healthcare costs, with a 43.5 percent increase in the median cost of coverage between 2000 and 2005. This impact is even greater on firms with fewer than 11 employees, experiencing a 53 percent increase over the same time period.

Not only are healthcare costs steadily rising for small businesses, Gates’ and Eibner’s research also found the quality of coverage is not consistent with that of larger firms.

'Solutions Start Here'

“Annual increases in healthcare premiums consume a higher percentage of a business’ payroll now more than ever, far outpacing wage increases,” said Todd Stottlemyer, president and CEO of the National Federation of Independent Business. “As a result, many small-business owners face a tough decision: provide a raise to their employees or offer healthcare coverage.”

In a separate national survey conducted by the NFIB, which measured the voting strength of small businesses, respondents indicated that healthcare is their most significant issue:

  • 53 percent of small-business voters, defined as owners and their employees, agree that healthcare is the “most important factor” in determining their vote.

  • Nearly 81 percent of small-business owners say that finding affordable healthcare for themselves and their employees is a challenge, with 16 percent saying it is their greatest challenge.

  • 71 percent of small-business voters believe that healthcare should be a top priority for the next president.

    To address the problem of rising small-business healthcare costs, the NFIB has launched “Solutions Start Here.” As part of this campaign, the group will host “Fix-it Forums” in nine cities across the country in order to shed light on how healthcare costs are influencing small-business owners and their employees.

    For more information about “Solutions Start Here” or the NFIB, contact Mike Diegel at 202/314-2004.