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Article Title:
==============

Small Business Health Insurance: Escaping the Catch-22

Article Description:
====================

As the economy continues to tank so do the number of Americans
without health insurance—and the number small business owners who
can afford to insure their employees.


Additional Article Information:
===============================

780 Words; formatted to 65 Characters per Line
Distribution Date and Time: 2008-05-29 11:12:00

Written By:     Melissa Mashtonio
Copyright:      2008
Contact Email:  mailto:[EMAIL PROTECTED]



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Small Business Health Insurance: Escaping the Catch-22
Copyright (c) 2008 Melissa Mashtonio
Manta
http://www.manta.com



As the economy continues to tank so do the number of Americans
without health insurance—and the number small business owners who
can afford to insure their employees.

A recent survey by the NFIB Research Foundation, a small business
advocacy group, showed that only 47 percent of small business
owners offer employee health benefits. Those employing 20 or more
people are more than twice as likely to offer employee health
benefits as those with fewer than 10.

The survey found that the low numbers are primarily the result of
new small businesses opting not to cover employees. Most small
businesses who offer benefits have offered them for a while and
are reluctant to drop them for fear of losing good employees.

“It’s much better for employee morale if a small-business owner
never offers health benefits, than it is to offer them and then
be forced to take it away because it is too expensive to
continue,” said William J. Dennis, NFIB’s senior research fellow.
“Small-business owners experience considerable turmoil in their
early years. They often experience cash flow problems and are
reluctant to incur additional expenses such as health insurance.
What’s new to this picture is that it appears that new
small-business owners are waiting longer or choosing not to offer
health insurance benefits to their employees at all.”

The fact that new small businesses are choosing not to offer
benefits is a disturbing trend because of the swift turnover of
the small business population. If the trend continues, the number
of employers who never offer benefits will increase. And that
will hurt small businesses because it will limit thet talent pool
from which they draw.

What Can Be Done?

Small businesses aren’t alone in struggling with the cost of
health care (and premiums) in the current economic climate. The
U.S. Census Bureau reports 47 million people, or 15.8 percent of
the U.S. population, were without health insurance during 2006

Unfortunately for the small business owner, new legislative
approaches to help the uninsured may actually hurt them. One
popular option is the "pay-or-play" mandate, in which employers
are required to either provide health insurance for their
employees or pay a penalty to offset costs the government incurs
to provide health care for the uninsured. The rules likely would
only apply to full-time employees.

Proponents say such mandates could significantly reduce the ranks
of the uninsured, since the vast majority of the uninsured are in
families with at least one full-time worker. Many of these are
low-income families, suggesting that such measures could benefit
the working poor.

Opponents argue that many low-wage workers will just be paid
less, reduced to part-time or laid off to offset the insurance
costs.

In their paper, "Employer Health Insurance Mandates and the Risk
of Unemployment," researchers Katherine Baicker and Helen Levy
found several factors affect the extent to which such mandates
cost more jobs:

 * Cost of the insurance. * How much of the cost of coverage will
be passed on to workers via lower wages. * How many uninsured
workers have earnings so close to the minimum wage that their
wages cannot be reduced enough to offset the cost of the new
coverage.

The authors found that the mandate would still leave 54 percent
of American workers without coverage.

“The vast majority of those who benefit from pay or play mandate
live in families with incomes twice the poverty line or more and,
depending on how coverage is determined, the mandate will leave a
significant share of the working poor ineligible for such
benefits either because their hourly wage rate is too high or
they work for smaller exempt firms,” the authors wrote.

Most experts agree that such mandates are bad for small
businesses. Employers are faced with hard choices. In the NFIB
poll, only 20 percent of small employers said they would simply
provide the insurance as required. Many more said they would
either cut jobs or move more employees to part-time status.

Moving people to part-time work is a particularly attractive
option to small business owners. In fact, how part-time employees
are treated is a key influencing factor on whether small
businesses support pay or play legislation.

According to NFIB, “The treatment of these employees will alter
relative costs in one direction or the other, providing small
employers’ strong relative incentive to change.”

Small business experts agree that if part-time employees are
covered by a mandate, most employers will respond by simply
eliminating jobs, adding to the jobless rate and doing nothing
for the rate of uninsured.

Small business owners have always faced an uncertain future but
the current economy and the health care crisis make this an
extremely tough time to take the startup step. 




---------------------------------------------------------------------
Melissa Mashtonio writes for http://www.manta.com/ the authority 
for finding 45 million free small to large company profiles 
worldwide-and their related industries and products. Manta’s 
Small Business Center features thousands of how-to-guides for 
small business owners.


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