Less than half of small businesses in Georgia offer health insurance to their workers.
And the percentage is even lower in rural South Georgia, according to a newly released survey of small firms by the Georgia Health Policy Center and Georgia State University’s J. Mack Robinson College of Business.
The survey, mailed to firms in January, drew responses from 1,510 firms with 2 to 500 employees.
It found that costs of health insurance have risen steeply – much higher than the inflation rate – since a similar survey in 2004. Premiums at small firms rose 60 percent for individual coverage, to $6,684 per worker, and jumped 40 percent for family coverage, to more than $13,000 per year, the survey found.
Those premiums are higher than the national average, though the data can’t be directly compared because the national survey, by Kaiser Family Foundation, does not include two-person firms as the Georgia survey did, said Pat Ketsche of Georgia State, lead author of the report on the survey.
Because of those costs, she said, the percentage of small firms in Georgia offering health insurance – 47 percent – is lower than the percentage of such businesses nationally providing coverage, 68 percent, as found in the Kaiser Foundation study.
The survey of small firms was done in conjunction with research that the Health Policy Center and Georgia State are furnishing to a state committee that’s exploring a possible health insurance exchange for small businesses in Georgia.
The panel is following up on a requirement in the 2010 federal health reform law that insurance exchanges for individuals and small businesses will operate in states in 2014. Gov. Nathan Deal, who appointed the committee, opposes the reform law. But Georgia, like numerous other states, chose to get involved in the exchange process rather than have the federal government run it, if the reform law is upheld by the courts.
(Here’s a recent GHN article on the state exchange committee.)
In Georgia, as elsewhere, the larger the size of a firm, the more likely it is to provide health insurance. By the same token, the smallest firms are historically the least likely to offer coverage.
The cost of health insurance is the No. 1 problem for small firms, according to past surveys by The National Federation of Independent Business, a group representing small businesses.
Mike Sullivan, president of a Conyers firm, Southeast Sealing Inc., said Friday that the cost of the company’s health insurance has increased 18 percent to 25 percent annually for the past 10 years. “It’s unreal,’’ he said.
The specialty contractor company has 15 employees.
As a result of the cost increases, Sullivan said, the firm has been forced to pare back the coverage it offers new workers.
Because almost all companies in the 100-to-500-employee category offer coverage, nearly 80 percent of Georgia workers in the overall small-firm category are employed by a business that provides insurance.
“Firms that offer insurance tend to be more stable firms and pay higher wages,’’ Ketsche said.
Rural companies in South Georgia – where just 38 percent provide health insurance — may have more part-time workers and have lower-wage employees, she said.
Employers have kept the percentage of premiums that employees pay roughly the same, but are now setting higher deductibles. “That’s one way they seem to be trying to control costs, by shifting costs to employees,’’ Ketsche said.
Many firms, though, don’t offer workers the chance to fund those deductibles with pre-tax dollars, with a health savings account or similar mechanism, the survey found.
The federal reform law, if fully implemented, would allow small, low-wage firms a tax credit to purchase health insurance through the exchange. Only 23 percent of Georgia firms that would be eligible for a full credit provide health insurance currently, the survey found.
“There are a lot of firms that could potentially benefit from the credit, but they don’t offer coverage now,’’ Ketsche said.
The restaurant and hotel industries have the lowest percentage of Georgia small firms offering health insurance, the survey found. Companies in wholesale trade, manufacturing, transportation and warehousing are most likely to provide coverage.
Will the continued health cost increases force small firms to jettison insurance coverage?
Only 15 percent are giving serious consideration to dropping coverage, yet another 36 percent say that it depends on their future profitability, the survey found.
Overall, the small firm survey “shows Georgia isn’t that different than what is happening in the rest of the country,’’ Ketsche said.