The small group health insurance market is facing an inevitable collapse as employer-provided health coverage is becoming unsustainable for millions of small businesses and their employees, the National Federation of Independent Businesses (NFIB) is warning. As a result, Iowa’s leading small business advocacy organization also issued a dire prognosis for that market’s future in its […]
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The small group health insurance market is facing an inevitable collapse as employer-provided health coverage is becoming unsustainable for millions of small businesses and their employees, the National Federation of Independent Businesses (NFIB) is warning.
As a result, Iowa’s leading small business advocacy organization also issued a dire prognosis for that market’s future in its new health care paper, released earlier this month, “Addressing the Health Insurance Affordability Crisis for Small Businesses.”
"The fact that only 30% of small businesses nationwide can still offer health insurance is deeply troubling for Iowa's rural communities and small towns,” said NFIB Iowa State Director Matt Everson in an NFIB news release. “Our state's small business owners need lawmakers to expand access to Health Savings Accounts, improve employer pooling arrangements, and prioritize other policies that make coverage more affordable."
Some key findings
Among the other data and conclusions shared in the report were:
- A small-group market in freefall, with enrollment plummeting from 15 million individuals in 2014 to just 8.5 million in 2023. That’s a 44% drop.
- Average premiums for small businesses are skyrocketing. Average single plan premiums have gone up 120% in the past two decades. Meanwhile average family plan premiums have increased by 129% for firms with 50 or fewer employees.
- Only 30% of small businesses still offer health insurance. That’s down from nearly 50% in 2000.
- A reported 98% of small businesses say they are concerned about whether they will be able to afford to continue offering health insurance in the next five years.
- Small businesses pay twice as much for health insurance as large businesses. Firms with less than $600,000 in revenue spend nearly 12% of payroll on health benefits, compared to 7% for firms with more than $2.4 million in revenue.
Legislative recommendations
The report also urged Iowa lawmakers to act on these issues:
- PBM Power Grab legislation – “Unfortunately, misguided PBM (pharmacy benefit manager) legislation has been introduced again and this might be the worst one yet,” the report said. “It is admirable that policymakers are seeking ways to lower the out-of-pocket cost of prescription drugs.” However, proposals to ban commercial-spread pricing arrangements, pass-through rebates and other remuneration to consumers at the point of sale merely shift costs among consumers. “They do not lower the cost of drugs, which results in higher premiums.” A dispensing fee on every transaction also will be borne by fully insured employers struggling with “unfathomable premiums.” Current estimates show the bill will cost Iowans $4 billion more in health care costs over the next several years.
- Protect employer-sponsored insurance.
- Support small businesses with targeted health insurance tax credits.
- Expand Individual Coverage Health Reimbursement Arrangements (ICHRAs).
- Improve employer pooling arrangements.
- Expand access to Health Savings Accounts (HSAs).
- Protect small business access to Stop-Loss Insurance.
- Expand affordable coverage options.
- Eliminate one-size-fits-all mandates that drive up premium costs and limit competition.
- Promote price transparency and price certainty.
- Discourage hospital consolidation.
- Reduce prescription drug prices through innovation.
