A Sick Statistic: Health Care Costs Soar

Small businesses aren't seeing big incentives in the new Health Care Act.

Image: iStockphoto

After rising only 3 percent in 2010, health care premiums for family coverage jumped an average of 9 percent this year, according to an annual study of employer-sponsored health insurance.

The study was conducted by the Kaiser Family Foundation and the Health Research & Educational Trust. It found the average annual premiums for employer-sponsored health insurance this year are $5,429 for single coverage and $15,073 for family coverage.

"This year’s 9 percent increase in premiums is especially painful for workers and employers struggling through a weak recovery," said Kaiser president and CEO Drew Altman.

Don’t blame us, said America’s Health Insurance Plans.

“Policymakers in Washington and the states need to focus on all of the factors that are driving premium increases: soaring prices for medical services, changes in the covered population that has resulted in an older and sicker risk pool, and new benefit and coverage mandates that add to the cost of insurance,” said AHIP president and CEO Karen Ignagni.

The study, which looked at businesses with three or more employees, found that 60 percent of employers offered health insurance to their workers. More than 80 percent of workers eligible for this coverage took it.

The impact of health care reform was seen in improvements to preventive care benefits and the enrollment of more adult children in workers’ insurance plans.

The survey found that some small businesses plan to take advantage of a tax credit that covers some of the cost of insurance, but the incentive is not having a major impact on health care coverage at small businesses. Only 29 percent of small businesses have attempted to determine their eligibility for the credit. Of those who made this attempt, only 30 percent intend to claim the credit for 2010 and 2011.

About half of small businesses who don’t offer health insurance are aware of the tax credit. Only 15 percent of these small businesses are considering offering health insurance as a result of this tax credit.

To be eligible for this tax credit, firms must have fewer than 25 full-time workers with average annual wages of less than $50,000. Employers must pick up at least 50 percent of the cost of health insurance. The tax credit is worth up to 35 percent of the employer’s premium costs, but only businesses with 10 or fewer employees with average wages of less than $25,000 are eligible for the full credit.