Small-Business Workers Least Likely To Be Insured

During this time, the number of people younger than age 65 covered by employer plans has fallen from 68% to 57%, according to a report by The Commonwealth Fund. Less than half (49%) of workers in companies with fewer than 50 employees were both offered and eligible for health insurance through their jobs in 2010, down from 58% in 2003.

In contrast, about 90% of workers in companies with 100 or more employees were offered and eligible for their employer’s health plans in both 2003 and 2010 and approximately seven of 10 were covered by their companies’ health plan in both years. Workers in the smallest firms—and those with the lowest wages—continue to be less likely to get coverage from their employers and more likely to be uninsured than workers in larger firms or with higher wages.

According to a 2006 analysis, small businesses, on average, pay nearly 18% more for the same benefits than large firms. These higher rates are the result of a number of factors: the ability of insurance carriers in many states to charge small firms higher premiums based on the health, age, and gender of their work forces, as well as the type of business it is, and because of higher per-employee administrative costs, including broker commissions.

Among workers in firms with fewer than 50 employees, only one-third (34%) of those earning less than $15 an hour were offered and eligible for health benefits at their job in 2010 and only 18% were covered by their companies’ health plans. In contrast, 70% of workers in small firms who earn $15 or more per hour were offered and eligible for health benefits and half (53%) were enrolled in health plans.

While low-wage workers in large firms fared better than those in small firms, these workers were also much less likely to be offered, eligible for, and covered by health benefits from their employer than higher-wage workers in large firms. Consequently, low-wage workers in small and large firms were more likely to be uninsured than were higher-wage earners in both small and large firms. Among workers earning less than $15 an hour, more than half (54%) of those in small firms and one-third in large firms were uninsured at some point in 2010. Adversely, among workers earning $15 or more an hour, 19% of workers in small firms and 7% in large firms were uninsured in 2010.

Only 36% of small-firm workers with health benefits from their employer were offered a choice of plans, compared with two-thirds (66%) of those in firms with 50 or more workers. In addition, 31% of small-firm workers faced an annual deductible of $1,000 or more compared with 21% of those in large firms. Fifteen percent of small-firm employees did not have prescription drug coverage included in their benefits packages, compared with 4% of larger-firm employees.

Most U.S. workers have health insurance through an employer, either their own or a family member’s. In 2010, three in five (59%) adults ages 19 to 64 who were working full- or part-time and who were not self-employed had health insurance from their own employer; an additional 16% were covered through a family member’s employer. One in four (26%) workers was not covered by an employer: 4% had public coverage (Medicaid or Medicare), 3% purchased their own plan in the individual market, 4% reported coverage from another source and 15% were uninsured.

Click here for the full report, “Realizing Health Reform’s Potential: Jobs Without Benefits: The Health Insurance Crisis Faced by Small Businesses and Their Workers.”