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CAN SMALL BUSINESSES PROVIDE AFFORDABLE HEALTH CARE

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CAN SMALL BUSINESSES PROVIDE AFFORDABLE HEALTH CARE

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  1. CAN SMALL BUSINESSES PROVIDE AFFORDABLE HEALTH CARE Kimbra Edwards Freddie Gochette Rudy Strong Anna Stammgard Shawn Ramsey

  2. Research Question Can small businesses provide affordable healthcare to employees and still maintain profits and margins?

  3. Small Business Facts • Employ half of the private work sector • fill niche markets • Increase competition • Innovate* • Face several challengers • Defined by 199 or less employees * United States Small Business Administration

  4. Healthcare Major Challenge • Both Small and Large businesses face increasing healthcare costs. • Small businesses lose their attractiveness • 56% of the workforce don’t have health insurance and no personal healthcare provider. • 16% states the same among the once who has insurance.* • Causes major health problem *Cover the Uninsured Week

  5. Healthcare Historical Facts • Small businesses have always been important to the US Economy* • Provides healthcare for US workforce • Uninsured workforce is a Federal government battle • HMO Act 1973, required employers to offer federally qualified HMOs to employees. *Gregg Steinberg

  6. Healthcare Historical Facts cont. • Cost for healthcare has been rising for decades. • 2004 was the fourth year insurance cost raised with double-digits* • Result of the rising healthcare cost shown. • 2004 63 % offered healthcare • 2001 68% offered healthcare.* * Henry, 2004

  7. Cost of Coverage Increase

  8. Healthcare Historical Facts cont. • 1960’s individual premiums were higher than today's. • 1960’s individual paid 55% • 1990’s individual paid 20%* • Individual premium has not increased with the healthcare cost. *Workforce, 2005

  9. Increase in Premiums Compared to Other Indicators Source: IRB Study: Kaiser/HRET Survey of Employer-Sponsored Health Benefits

  10. Today’s provision of healthcare • The cost is reason for not providing healthcare • Healthcare is the 2nd largest cost for small businesses.* • 66% of small businesses provides health insurance as a benefit.* • 7 of 10 businesses do not provide healthcare for eligible employees** • Main reason is the cost *IPA SBRB **NASE

  11. Factors reflecting if healthcare can be provided • As small businesses are cutting healthcare, employees are more than ever valuing it.* • Health care benefits could become more important than salary. • Healthcare cost was the single most important issue that small businesses owners were worried about for this upcoming year.** *Tobacco, 2005 **IPA SBRB

  12. Factors reflecting if healthcare can be provided cont. • Reducing small businesses cost • Raise employee premium. • Raise the co-pay • Incorporate co-insurance • Co-payments from the employee on certain medical procedures.* *Tobacco, 2005

  13. Factors reflecting if healthcare can be provided cont. Health Savings Accounts (HSA) • Improvement/Modernization Act 2003 • Employers/Employees makes pre-tax payments into a account. • Money can be transferred • Only used with high deductibles • $ 1000 Individual • $ 2000 Family • Tax-free after retirement towards medical cost.* *Sinnett, 2004

  14. Factors reflecting if healthcare can be providedcont. Health Reimbursement Accounts (HRA) • Employer pay for health reimbursement accounts and incentives. • Employee draw the money • Money can be transferred • When account is emptied insurance covers future health costs.* *Sinnett, 2004

  15. Factors reflecting if healthcare can be providedcont. Associate Health Plans (AHPs) • Pending for approval from Senate • Small businesses will be able to associate together to negotiate better healthcare programs • This program can save Small Businesses 20 to 30 %* *Washington, 2005

  16. Impact of employees having healthcare • 1.5 million personal bankruptcies in February 2005 • 46% was due to uncovered medical expenses* * Policy Journal of the Health Sphere

  17. Impact of Healthcare Costs Source: IPA SBRB Study

  18. Summary • Small businesses have struggled with providing sufficient healthcare because of the cost. • The increased cost is forcing the small businesses to cut their employees health insurance. • The Federal government has provided several programs in effort of helping the uninsured workforce as well as the small businesses.