Critical Small Business Issue:
Health Insurance Costs

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The high cost of health insurance is the leading concern of small-business owners across the country, according to a recent survey released by the National Federation of Independent Business (NFIB) and Wells Fargo. The survey measured which aspects of running a business were most troubling for small business owners. Responses were collected from 4,603 businesses. Respondents rated each of 75 possible business problems on a scale of 1 to 7, with 1 indicating a critical problem.

While health-care costs have been top ranked since 1986, the number of respondents citing the issue as critical spiked dramatically. In 2000, 47 percent cited health-care costs as critical. In 2004, the number rose to 65.6 percent, an 18 percent increase over a four-year period. "While there might be some disagreement among small-business owners about many problems, the cost of health care is a critical concern that is prevalent across all regions, industries and businesses," said Senior Research Fellow Bruce D. Phillips. "Regardless of whether the business offers insurance and is worried about increased costs, or the business wants to offer health insurance but can't afford it, the increasing cost of health care is having a significant effect on small-business owners. No other single problem can touch health-care costs in terms of the unanimity or intensity of concern it generates among small-business owners."

Five of the top ten problems worrying small-business owners concerned cost issues. In addition to health insurance, these included the cost and availability of liability insurance (30.1 percent), worker's compensation costs (32.8 percent), energy costs (26.1 percent) and electricity rates (15.1 percent).

The rest of the top 10 problems small-business owners considered critical concerned federal, state and property taxes, and the burden of "unreasonable government regulations." Interestingly, small-business owners were less concerned about "hot button" political issues. Respondents cited "exporting my products/ services" and "competition from imported goods" as the tenth and sixth least severe problems on the survey.

As Phillips noted, "Small-business owners consider the daily burdens of health-care costs, taxation and regulation far more difficult to deal with than what candidates are discussing on the evening news.

One of Extensis' key objectives is to manage our clients' healthcare costs, for now and into the future. Our tight management of our healthcare providers and knowledge of the industry allow our clients to offer better, cost effective benefits to their employees. We are of New Jersey's largest professional employer organizations. For more information on how Extensis can manage your healthcare expenses for your business, go to www.extensisgroup.com, or call 888-473-6398.