Small Businesses Have Affordable Health Insurance Options

Small Business Affordable Health Insurance

Health insurance coverage for small employers is more affordable than is widely known, a new survey released today by America's Health Insurance Plans (AHIP) found.

The survey of AHIP member companies offering coverage in the small-group health insurance market includes premium and benefit data from more than 650,000 small groups (those with 50 or fewer employees), covering 4.0 million workers and 3.2 million dependents.

"Small businesses need affordable products for their employees and health insurance plans are responding by offering innovative product designs with lower premiums," said Karen Ignagni, President and CEO of America's Health Insurance Plans. "Without a doubt, policymakers could do more to give health insurance plans greater flexibility to provide even more affordable products for all businesses," she continued. "In addition, policymakers should focus on reforming the medical liability system, supporting programs that measure and reward quality care, and developing a system to evaluate the safety, efficacy and cost- effectiveness of new technologies to ensure they provide better value than existing treatments."

Key survey findings on health insurance:

• Small group premiums in 2006 were slightly lower than those reported in the 2005 Kaiser Family Foundation (KFF) survey of (mostly) larger employers, despite an additional year's increase in health costs. Premiums in the KFF survey for all firms with three or more employees averaged $335 per month ($4,024 annually) for single coverage, and $907 per month ($10,880 per year) for family coverage in 2005.

• In 2006, the average premium for small group health insurance was $311 per month ($3,730 per year) for single coverage and $814 per month ($9,770 annually) for family coverage.

• In terms of benefit design, most small business employees are covered by PPO and HMO products, while HSA-eligible health plans are quickly establishing a presence in the small group market.

• Among small group enrollees, 57 percent had PPO coverage in 2006, with both in-network and out-of network benefits. Thirty nine percent had HMO coverage, often with a point-of service (POS) option. Approximately 4 percent of enrollees had a health savings account (HSA) benefit, with a qualifying high deductible health plan (HDHP).

• More than 10 percent of small group enrollees had a choice of two or more benefit plans. Of workers offered an HSA plan, approximately one-third also had a choice of a PPO or HMO/POS plan. Almost half (46 percent) of enrollees in small groups chose HSA/HDHP plans when offered a choice of HSA plans and other types of health plans.

• Within the small group market, premiums fell slightly as firm size increased. Firms with between 26 and 50 employees paid an average of $287 per month for single coverage, while firms with between 11 and 25 employees paid an average of $299 per month, and firms with 10 or fewer employees had average single premiums of $330 per month.

America's Health Insurance Plans - Providing Health Benefits to More Than 200 Million Americans