The New York Times on Thursday examined how some small business owners "have had to come up with innovative strategies to cope with double-digit increases in their health insurance premiums." Some small businesses are reluctant to reduce employee benefits or increase workers' share of costs, but "more small businesses are giving up," the Times reports. According to the Times, small businesses "seem to be bearing the brunt" of "soaring" health expenses. A recent study by the Kaiser Family Foundation and the Health Research and Educational Trust found that health care premiums for businesses with fewer than 200 workers last year increased 15.5%, compared with 13.2 % for larger companies. In addition, the study found that 55% of companies with three to nine employees offered insurance, compared with 95% of businesses with 50 to 199 employees, 84% of companies with 25 to 49 employees and 76% of companies with 10 to 24 employees. According to the Times, "[T]he smaller the firm, the more it pays" to provide employee health insurance, particularly if it has a high proportion of older or female workers. Larger companies have more negotiating power, can more easily handle rate increases and can be self-insured.

Solutions
To address the issue, states such as Maine are developing programs to provide lower-cost health coverage to small business employees, those who are self-employed and people with low annual incomes through discounts, reduced deductibles and a limit on out-of-pocket medical expenses. Many small business owners also have considered joining cooperatives to negotiate lower rates because of their larger size; however, many states either ban or restrict such groups, according to Jessie Howe Brairton, a legislative affairs specialist at the National Federation of Independent Business. Further, some small businesses "are experimenting with unusual solutions to ease their health care woes," such as joining a "so-called professional employer organization," which sometimes is able to negotiate lower prices by assuming the administrative functions of its clients and treating the workers as "its own for organizational purposes," the Times reports (Tahmincioglu, New York Times, 8/26).