Health Care Costs Critical Issue for Small Businesses
By Congressman Dennis Moore

For those who think the rising costs of health insurance benefits have been tough on corporate America, try paying for benefits as part of a small business.

Small business owners have consistently told me that footing the bill for health insurance benefits is one of their most pressing challenges. New research compiled from the Third District of Kansas bears witness to the truth of these anecdotes. Over 450 small businesses in the Kansas City area voiced their opinions in a survey I commissioned about the impact of rising health insurance costs.

The findings included:
•    The cost of health insurance for small businesses is increasing rapidly. In the last year, average health insurance costs for small businesses increased by 23 percent, over 14 times the rate of inflation. This represents an annual cost increase of over $900 per employee. Over the last five years, average health insurance costs for small businesses have increased 84 percent, seven times the rate of inflation.
•    Health insurance cost increases for small businesses are accelerating. Health insurance costs for small businesses have increased at an average rate of 13 percent annually over the last five years. But in the last year, this rate of increase has almost doubled. And health insurance costs for small businesses are expected to increase by almost 20 percent again in 2003.
•    Health insurance costs are rising the fastest for the smallest businesses. Though these firms are less able to absorb rising costs, insurance rates for firms with fewer than 10 employees have increased by 27 percent in the last year. This is an average yearly increase of more than $1,100 per employee.
•    The increases in health insurance costs are resulting in reduced coverage and may cause many small businesses to end coverage entirely. Cost increases have forced three-quarters of small businesses surveyed to reduce benefits. Over half of surveyed businesses indicated that if health insurance costs continued to increase, they could be forced to eliminate health insurance coverage completely.

Comments in the survey illustrate the urgency of this crisis. As one business owner explained: "Increased costs may require some families to make a decision—food or medical insurance." Another said the health care costs may force the business to close its doors: "We have been in business 33 years and never did we dream that the cost of insurance would threaten our business the way it has in the last five years. There has to be an end or businesses such as ours will be a thing of the past."

Addressing these concerns is the right thing to do for businesses and the right thing to do for the over 400,000 small business employees in Kansas. This new data reaffirms my commitment to work to pass legislation that would create tax incentives for small businesses to provide health insurance to their employees.

My bill would provide:

•    A temporary tax credit for small employers who have not offered health insurance plans in the last two years
•    An additional tax credit for businesses if they join in a Health Benefit Purchasing Coalition which will allow small businesses to negotiate with insurers and benefit from economies of scale, just as large companies do
•    $100 million per year for five years for state grant programs that expand health insurance to the uninsured through market innovations
    Certainly, this bill doesn't offer the final solution to every problem in the survey. I do believe, however, that we can effectively target federal resources to the population most likely to be uninsured. This bill is a good start.
    
Congressman Dennis Moore represents Kansas' Third U.S. Congressional District, which includes Johnson, Wyandotte and part of Douglas county. Moore has offices in Overland Park, Kansas City, Lawrence and Washington, D.C. The Congressman's Web site is www.house.gov/moore, and you can reach his office at 913-383-2013.