News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
January 23, 2008     

CONTACT: Press Office ,  (202) 225-4038

Variety of Challenges Make Affordable Health Care Options Elusive for Small Businesses

WASHINGTON, D.C. — Of the 47 million people across the nation who lack health insurance, more than half live in a household headed by a small business owner or employee. One of the principal challenges these businesses face is a lack of viable health care options in the small group market.  Today, the House Committee on Small Business heard from an array of entrepreneurs who discussed the many obstacles that keep them from finding, keeping and administering health care coverage.

“When small business owners are unable to provide health insurance, it affects their own families and those of millions of other Americans.  Unfortunately, small firms are often faced with the reality that they can’t continue to operate or must lay off staff in order to offer these benefits,” said Chairwoman Nydia M. Velázquez.

According to a recent study, small employers have seen their health premiums increase an average of more than 8 percent a year since 2001 and firms with less than 24 workers have experienced even more severe increases.  Witnesses—some of whom had been forced to change health plans three times in less than 48 months—said cost was a major concern, but not the only challenge.  These firms must also regularly handle massive amounts of paperwork for medical claims, and devote much of their valuable time to working with insurance vendors and brokers. 

“High premiums are a serious problem, but so are the less obvious costs faced by entrepreneurs looking to offer health benefits,” said Velázquez.  “When small business owners are forced to divert so much of their time and resources to dealing with this, it takes away from their ability to focus on growing their firms and driving the economy.”

Witnesses told the Committee about the unique obstacles smaller companies face in finding affordable coverage.  The stories ranged from a firm being denied eligibility because of a pre-existing condition to a small business owner having to decide between paying their mortgage and providing health care options to employees.  The Committee also heard about access issues facing Rural America; where physician shortages and limited health services discourage insurers from offering any plan whatsoever to small businesses.

“American entrepreneurs should not have to choose between grappling with unreasonable obstacles and dropping their health insurance,” underscored Velázquez.  “We should view the intersection of small businesses needs and the health care crisis as an opportunity—both to strengthen our economy and meet the needs of the uninsured.”

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