Small Business Owners Speak Out

Published June 1, 2001

A new national survey, sponsored by the National Association of Health Underwriters (NAHU) and co-sponsored by the Healthcare Leadership Council (HLC), National Association of Manufacturers (NAM), and U.S. Chamber of Commerce, reveals considerable support among small business owners for market-based solutions addressing the health insurance needs of the nation’s 43 million uninsured citizens.

Kate Sullivan, director of health care policy for the U.S. Chamber of Commerce, found lessons for reformers in the survey, released March 9.

“Not surprisingly,” she said, “small employers report that cost is the major barrier in being able to offer health coverage or employees being able to participate in the plan.”

“With survey participants reporting average premium increases in excess of 15 percent,” said Sullivan, “now is the time for Congress to pursue options to make coverage more affordable, not more expensive.”

Key Findings

Survey participants were asked, among other things, why they offer health coverage to their employees; how health care costs are shared between employer and employee; and how they perceive health care reform initiatives currently under consideration.

  • 66 percent of small employers surveyed who do not currently offer health insurance coverage to their employees identified cost as the principal reason they do not provide this benefit.
  • 51 percent say they don’t offer coverage because their employees cannot afford their share of the premium.
  • 84 percent support a tax credit to help their lower-income employees purchase employer-sponsored health insurance coverage.
  • 76 percent support a tax credit that could be applied to purchase either employer-sponsored coverage or coverage in the individual market.
  • 71 percent would cooperate in the administration of a program offering tax credits for the purchase of health insurance.

“While employers play a central role in protecting their employees and their families,” noted Kevin Corcoran, executive vice president of NAHU, “there are limits to what they can do. Even when they contribute to the cost of family coverage, the average employee still pays over half the premium out of his/her pocket. A health tax credit would fill this gap, helping employees utilize one of their most valuable employee benefits.”

  • 79 percent of employees who do not take advantage of employer-provided health insurance do not because they have coverage elsewhere.
  • 18 percent of employees who do not take coverage cite financial reasons.
  • 81 percent of the companies that do offer health insurance offer only one plan. HMOs (41 percent) and PPOs (36 percent) are the most common.

Tax Credits: Road to Reform

In a recent news release, NAHU President Michael Matznick commented on the survey results. “We are gratified to see that the facts strongly support the health credit proposals NAHU and our colleagues have advocated for some time.”

He continued, “We believe that tax credits—provided that they preserve the employer-based system—will be a ‘win-win’ for everyone involved. They encourage greater employee participation and, as a result, employers will be more inclined to offer coverage.”

The survey results make clear the significant role employers play in providing health coverage, dispelling a common myth that employers contribute little to employee health plans. More than 50 percent of employers responding to the survey pay the full cost of the health insurance premium for their employees. Thirty-five percent of employers also make contributions toward coverage for an employee’s spouse and dependent children.

Noted Neil Trautwein, director of employment policy for NAM, “Manufacturers are strongly committed to providing health benefits and provide some of the most generous health care benefits around to their employees. Nevertheless, the cost of health coverage is an obstacle even in the manufacturing sector. This problem is getting worse as health care costs rise, pricing increasing numbers of employers and workers out of coverage.

“The results of the NAHU study confirm,” said Trautwein, “that health tax credits are an effective way to ease the cost crunch and boost coverage, which has long been one of the NAM’s top health reform policies.”

Mary Grealy, president of HLC, agreed. “Studies consistently show that people without health insurance have higher disease and mortality rates than those who have coverage. It is sound public policy to use a portion of our nation’s prosperity to make health coverage accessible for the millions of small business owners who want to protect their employees and the workers across America who want their families to have the best quality health care.”

The survey was conducted by WB&A Market Research for NAHU. The firm conducted interviews with small business decision-makers in a variety of industries, with equal representation from each of the four U.S. Census regions. Three hundred owners or benefits managers of businesses with between two and 50 benefits-eligible employees were interviewed. Businesses who do and do not offer employee health care plans were surveyed. The maximum sampling error is +/- 5.7 percentage points.

For more information . . .

The full text of the 73-page NAHU survey is available on the Internet at

The National Association of Health Underwriters represents nearly 17,000 professional health insurance agents and brokers who service the insurance needs of millions of Americans. Founded in 1930, there are now more than 200 state and local chapters throughout the United States. NAHU is headquartered in Arlington, Virginia. For more information, contact Martin Carr, communications manager, at 703/276-3816, email [email protected].