Small Business Looking for New Answers to Health Insurance

A Home Business Article Contributed by Elizabeth Fox-Wise

Health Insurance Premium Have Outpaced Many Small Business Budgets

Health Insurance costs have gotten so expensive that many small business owners have had to stop carrying it all together. Health Insurance costs to business went up an average of fourteen percent last year. And to small business, the average increase was fifteen percent. This was the fifth year in a row of double digit increases in health insurance costs to businesses.

In their desperate search for solutions, small business owners have tried a number of alternatives to health insurance. Some have turned to the government sponsored programs. Others have tired to run their own Health Savings Account for their employees where the employee pays in and small business holds the money in an account until medical expenses arise, but this proved too risky and costly for most small business. And still others have given up on health insurance coverage all together and they and their employees "hope for health".

Many Small Business Owners are Turning to Consumer Driven Solutions for Health Insurance

But an ever increasing number of small business owners and self employed, are turning to consumer driven health plans. Typically a consumer driven plan combines a high deductible, basic, health insurance policy with a tax advantaged, self controlled medical savings account. The savings account is to cover some, or all, of the health insurance deductible.

Any money left in the account at the end of the year can be rolled over to the next year; and with some plans, if never used for medical expenses can be used as a retirement account. This encourages employees not to abuse the policy and only to go for medical treatment when needed.

A Consumer Driven Health Insurance Alternative Form Small Business is Controversial

Many small business owners say that not only are consumer driven health insurance options good for small businesses and their employees, but they also may be a help towards fixing the Health Care problems in America.

It is widely thought that one of the reasons health care costs in America have outgrown inflation costs at such an outrageous pace, is because too many people are too quick to seek health care for too many things. The thought is that many people will not worry about whether they really need to go to the doctor when all they have to pay is a $10 or $20 co-payment.

Proponents of a consumer driven health care saving plan say that by giving Americans an account of their own to spend on health care, they will become smarter and more cautious health care consumers. The hoped for result is that they will spend less, and health insurance premiums will finally begin to come under control.

Critics of a Consumer Driven health care plan say that all that they accomplish is to shift more of the health care expense to the employees. And that employees with more health care problems will bear the biggest burden of all.

Consumer Driven Health Care plans have not been around long enough for their success to be adequately evaluated.