Mr. Slabaugh
English 106
8 April 2008
Benefits for Employees of Small Businesses: A Necessary Change
According to an April 2007 essay conducted by the NSBA (National Small Business Association) only 41 percent of respondents offer health benefits to their employees, down 10 percent from the year 2000. (1) The article also stated that 77 percent of these companies not offering health benefits cited health benefits as the number one benefit they would like to offer their employees. (1) This clearly increasing problem strains employers and employees both. Hardworking men and women are unable to obtain affordable health care due to the rising financial burden that employers face. Government subsidized health care has been a staple of the United States government for decades; it is now time to offer these subsidiaries to deserving citizens.
The increasing cost of health care in the United States is a harsh reality that will not soon change. According to a New York Times article, the healthcare benefits for businesses who employee less than 200 people rose 15 and a half percent from last year. (3) The truth is that citizens cannot rely on the price of insurance premiums to drop. Evidence of employers realizing such realities are growing rapidly as well. For instance, the New York Times article tells the story of small business owner Dave Ratner, owner of a small retail chain along the Eastern Seaboard called Dave’s Soda. Mr. Ratner has been forced to place for of the financial burden on his employees in the form of office visit and prescription drug co-payments and hospital stays. (3) Even with the steps he has taken to cut costs he will pay $60,000 dollars for his 17 employees, up from $44,600 the previous year.
According to the National Coalition of Healthcare, healthcare expenditures are expected to rise 6.9 percent, nearly twice as much as inflation. (5) This statistic is a fantastic indicator of the severity of the problem that Americans face. The coalition also states on their website that if something does not drastically change health insurance costs to employers will overtake profits by the end of 2008. (5) Obvious action needs to be taken in order to avoid the demise of small businesses nationwide.
Small businesses are generally defined as employing 100 or fewer people according to Title 13, Part 121 of the Code of Federal Regulations, but vary from industry to industry. (8) Companies falling into this category employee more than half of all Americans. (6) Any problem burdening more than half of Americans is worthy of concern and a solution. Solutions this widespread need to undertaken by an enormous organization. The United States government is the only organization large enough, with enough financial resources (in the form of taxes) to do so.
The United States government should provide a subsidiary to small business owners who currently have no health benefits or highly priced benefits. The subsidiary would aid small companies in contributing to a health insurance plan for their employees. Generally speaking these companies would be given money based on how many employees they employ. Then a federal law would be set in place mandating that all businesses, including small businesses offer healthcare to their full-time employees. The national plan would be enforced gradually over 5 years, beginning with a redirection of federal funds.
Last year the United States government spent an astounding $303,882,398,422 on the Medicaid program. (4) The total expenditures on health care nationally in that same year were $2.3 trillion. (5) So over thirteen percent of healthcare expenditures in the U.S. are provided by the Medicaid program. A program entirely funded by the citizens of the United States of America.
If half of the money dedicated to Medicaid in the United States (around $150 billion) was redirected towards a “small business employer aid program”, hardworking men and women around the country would no longer worry about the growing financial burden of health insurance. (5) That said, the first phase of the plan would have to be a redirection of tax dollars spent on Medicaid to the program. The Medicaid program would still stand, but with significantly reduced funding. To reduce funding, the number receiving aid would have to reduce as well. A nationwide screening process would have to be implemented in order to determine who which citizens are most deserving of aid.
After screening out all Medicaid beneficiaries not worthy of the aid, phase two of the plan will be put into effect, a government aid program. With an instant $150 billion dollars of aid, a program will be put in place to direct that money toward small business owners. With this money small business owners will be able to reduce the cost of health care for their employees and them as well. The average cost of health care per person in the United States is around $7600 per year. (5) The average price of health benefits for an employee of a small business is around $9000 dollars. (3) The goal after the implementation of this plan would be to bring these two figures closer together. The feasibility of the plan would lie in the tremendous amount of capital raised by the reduction of the Medicaid program.
A third phase of the plan, simultaneous with phase two, would be enacting a law requiring any small business (as previously defined) to provide health benefits to their employees. Health benefits would need to be more specifically defined in the act, but in general terms the employer would generally pay at least 40 percent of the premium. (3)
In conclusion, action needs to be taken to curb the rising cost of health insurance and the burden it present to small business employees and employers both. Although the Medicaid system has been in place for decades, the time for change is now. Around 70 percent of citizen receiving aid from Medicaid are unemployed or underemployed. (4) It is now time to reward those full-time hard-working men and women of small business with benefits that will truly make a difference in their bottom line. Firms employing less than 24 people are seeing a 6.8 percent rise in healthcare benefits in the last year alone. (5) Within five years, great strides can be made to combat the rising costs of healthcare if these changes were to be made.
Intended for publication in The Journal of Small Business Management
Works Cited
1. Not Given. "“Small Business Health Insurance: Building a Gateway to Coverage”." The National Small Business Association ns 1.1 (2007): 1-10. 8 Apr. 2008
2. Prnewswire. "Small Business Health Care Survey Points to Need for Reform." Trading Markets. 27 Mar. 2008. COMTEX. 8 Apr. 2008
3. Tahmincioglu, Eve. "SMALL BUSINESS; Tackling the High Cost of Health Benefits Takes Some Creativity." The New York Times 26 Aug. 2004. 8 Apr. 2008
4. Not Given. "Total Medicaid Spending." State Health Facts. 2006. The Kaiser Family Foundation. 8 Apr. 2008
5. "Health Insurance Costs." National Coalition on Healthcare. 2008. 8 Apr. 2008
6. Osmer, Anne. "Choosing Independent Health Insurance." WWJ 950 News Radio. 20 Nov. 2007. 8 Apr. 2008
7. U.s. Census Bureau. "Income - Median Family Income in the Past 12 Months by Family Size." U.S. Census Bureau. 2006. 8 Apr. 2008
8. North American Industrial Classification System. "What is a Small Business?" Federal Access. 2000. 8 Apr. 2008