The high cost of starting up: Health care
In a 2006 study by NAS Insights, it was found that millenials (born 1977-1994) generally had characteristics that was suited for self-employment. However, high start up cost, and in particular, employee health care requirements made this difficult. In fact, only 1.9% of those under 25 are self-employed. This number increases with age, presumably after many have toiled and saved enough under the big corporations.
The National Coalition on Health Care lists these facts on its website:
Employer and Employee Health Insurance Costs
* Premiums for employer-based health insurance rose by 5.0 percent in 2008. In 2007, small employers saw their premiums, on average, increase 5.5 percent. Firms with less than 24 workers, experienced an increase of 6.8 percent.
* The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008. Workers contributed nearly $3,400, or 12 percent more than they did in 2007. The annual premiums for family coverage significantly eclipsed the gross earnings for a full-time, minimum-wage worker ($10,712).
* Workers are now paying $1,600 more in premiums annually for family coverage than they did in 1999.
* Since 1999, employment-based health insurance premiums have increased 120 percent, compared to cumulative inflation of 44 percent and cumulative wage growth of 29 percent during the same period.
Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by the end of 2008.
* According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers’ earnings since 1999.
* The average employee contribution to company-provided health insurance has increased more than 120 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.
*The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, that exceeds $2,000 a year, rose from 37.3 percent in 1996 to 43.1 percent in 2003 – a 16 percent increase.
There are many benefits to providing health care to your workers, including increasing employee retention, office morale, and productivity. The price small firms have to pay to do the right thing, however, is discouraging. Here’s hoping the next administration implements are better deal on this very basic need.
Have you had issues with providing health care? How were you able to deal with them?
Share your thoughts!!!