Scientific Opinion Poll: Small Business Forced to Choose Between High Cost of Healthcare and Employee Benefits
New Small Business Majority and Families USA survey reveals more than one-third of small businesses are struggling to access health insurance during COVID-19; Nearly 1 in 5 plan to make changes to or reduce health coverage soon
A new scientific opinion poll released today finds that the nation's small businesses are struggling to afford healthcare benefits and want policymakers to focus on long-term solutions that can expand access to coverage and lower healthcare costs for small employers in a way that stop-gap healthcare provisions in the American Rescue Plan do not.
The poll, conducted by Lake Research Partners, finds accessing health insurance has been a top barrier for small businesses during the pandemic as more than 1 in 3 (34%) say it’s a challenge getting health insurance coverage for themselves and their employees. Black, Latino and AAPI small business owners are more likely to list this as a challenge than white small business owners (50% Black, 44% AAPI and 43% Latino small businesses). This finding is consistent with previous polling that showed entrepreneurs of color have fewer resources than their white counterparts. Indeed, prior polling released by Small Business Majority of this same sample revealed that entrepreneurs of color were more likely to report that they are facing temporary or permanent closure in the next few months than their white small business owners, and they were also more likely to report that they’re struggling with their rent or mortgage and current debt repayments.
Providing health insurance to employees has long been among the costliest aspects of running a small business, and this challenge has only been exacerbated by the pandemic. The poll found that small businesses are struggling to offer robust healthcare plans to their employees, and are being forced to cut benefits. Among small business owners who have reduced health insurance, 36% have decreased their employer contribution for healthcare premiums, and 56% moved to a plan with a lower premium. What’s more, nearly 1 in 5 small business owners say they plan to make changes to or reduce healthcare coverage in the next few months. Despite these challenges, more than a quarter maintained healthcare coverage (27%) for temporarily furloughed employees.
“I couldn’t afford health insurance before COVID-19, then when the pandemic hit I lost three major clients,” said LaTonya Clay, owner of LC Tax and Bookkeeping in Snellville, Ga. “This has been devastating because I have diabetes, and I’ve often been forced to delay necessary care because of the expense. As I rebuild my business I want to be able to bring on an employee, but if healthcare costs continue to skyrocket, hiring will be a real challenge. Although I do have have insurance today, I believe we still need to address the rising cost of health coverage so that entrepreneurs like me can get the care we need to stay healthy enough to keep our doors open, and to ensure that we can afford to offer the kind of benefits needed to attract and retain great employees.”
While Congress included numerous temporary provisions to expand access to affordable coverage in the American Rescue Plan, such as increasing for two years subsidies for health insurance premiums and extending COBRA coverage through September to employees who were laid off, small businesses will need long-term support to continue offering strong healthcare benefits. Small business owners were asked about a variety of healthcare policy proposals, and the most popular policy idea is to bring down the price of prescription drugs (90% total support, with 54% strongly supporting). Preserving coverage for those with pre-existing conditions (87% total support/51% strongly support) also finds very strong support.
“Once again, small employers are canaries singing in the coal mines of American health care. Small business is hurting, and health care costs are rising. Too many small companies are being forced to cut back health benefits or eliminate health coverage entirely," said Frederick Isasi, Executive Director of Families USA. "Small firms are calling for common-sense reforms that bring outrageous drug costs under control and provide an option for low-cost, Medicare-like insurance for people and companies who want it. It’s time for our leaders to come together and pass practical solutions that lower health care costs for all of us.”
Additional healthcare policy priorities found strong support among all respondents:
- 75% support a public health insurance option that anyone could purchase from
- 73% support expanding Medicaid eligibility in all states
- 66% support allowing individuals to buy-in early to Medicare, starting at age 55
“The American Rescue Plan extended a critical lifeline to America’s entrepreneurs and small businesses, but it is not a lasting solution to the myriad challenges that face small businesses,” said Small Business Majority Founder & CEO John Arensmeyer. “Addressing the unique challenges for small businesses, including the high cost of healthcare through lasting change like expanding Medicaid and Medicare buy-in, must be first priority for lawmakers. In doing so, we will ensure that small businesses come out stronger from the pandemic and remain attractive places to work, offering their employees competitive benefits.”
This poll reflects a national survey of 500 small business owners with up to 100 employees, with oversamples of 300 Black, 300 Latino and 150 AAPI small business owners. For the full report, visit: https://smallbusinessmajority.org/our-research/healthcare/small-businesses-struggling-access-healthcare-during-covid-19-pandemic
About Families USA
Families USA, a leading national voice for health care consumers, is dedicated to the achievement of high-quality, affordable health care and improved health for all.
About Small Business Majority
Small Business Majority is a national small business organization that empowers America's diverse entrepreneurs to build a thriving and equitable economy. We engage our network of more than 80,000 small businesses and 1,000 business and community organizations to advocate for public policy solutions and deliver resources to entrepreneurs that promote equitable small business growth. Our deep connections with the small business community along with our scientific research enable us to educate the public about key issues impacting America’s entrepreneurs, with a special focus on advancing the smallest businesses and those facing systemic inequalities. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.