---



United States Small Business Administration

Office of Advocacy

RS Number 126

---











PURPOSE

Small businesses face substantial cost and other
barriers

in obtaining health insurance coverage for their

employees. An analysis of data from the Current

Population Survey, performed by the Bureau of the
Census,

indicates that 28 percent of workers aged 18-64 who
are

employed by firms with fewer than 25 employees had
no

health insurance coverage in 1989, compared with
8

percent for firms with 1,000 or more employees. This

study was commissioned to identify and examine strategies

that are proving successful in increasing health
care

coverage for small business employees.

SCOPE AND METHODOLOGY

The study identified and reviewed the characteristics
of

27 programs that have been successful or show promise
of

success in expanding health insurance coverage for
small

firms. Case studies were conducted for each of these

programs covering benefit structure and premiums,

administration and marketing, enrollment, and lessons

learned. The programs reviewed include those funded
by

the Robert Wood Johnson Foundation as part of its
Health

Care for the Uninsured Program; state legislative

initiatives; products specifically designed for uninsured

small businesses, developed by Blue Cross and Blue
Shield

plans; programs implemented through trade associations;

and model legislation to improve access, developed
by the

National Association of Insurance Commissioners.

Program strategies include improving the information

available to employers regarding insurance policies,

eliminating mandated benefits requirements for policies

sold to small businesses, using significant cost
sharing

and provider discounts to reduce premium rates, adopting

group purchasing arrangements, using managed care

programs, restructuring insurance regulations relating
to

underwriting practices, and other initiatives.

HIGHLIGHTS

High cost was consistently identified by program

developers as the most important reason why small
firms

do not provide health insurance for their employees.
Even

when the higher marketing and administrative costs

associated with providing coverage for small businesses

were eliminated--as in many of the case studies--the

researchers found that many small businesses that
did not

already have health insurance did not purchase coverage.

The case studies suggest that significant insurance

premium subsidies may be required to lower premiums

enough for small businesses currently without insurance

to provide coverage for their employees.

Successful program initiatives for improving small

business access to health care had the following

characteristics in common:

* attractive benefit designs that were similar to
a

traditional benefit plan,

* managed care and lower than prevailing provider

rates,

* aggressive and creative marketing,

* substantial community support, and

* relatively low employer premium rates.

The review of private and public sector initiatives
to

improve small business access to health insurance

coverage has identified a number of programs that
work.

These programs have achieved significant enrollment
among

firms that previously did not provide insurance coverage

for their employees. The descriptions of the program

features in the body of the report and in the case

studies can help in designing expanded initiatives
at the

local, state, and possibly national levels to facilitate

increased insurance coverage among small businesses.

For more information, contact Advocacy's Office of

Information at (202) 205-6531.

Ordering Information

The complete report is available from:

National Technical Information Service

U.S. Department of Commerce

5285 Port Royal Road

Springfield, VA 22161

(800) 553-6847

Order number: PB92-183607

Cost: Pending
*Last Modified 6-11-01