New Solutions are Needed for Small Business Health Care

A Home Business Article Contributed by Elizabeth Fox-Wise

The Number One Concern of Most Small Business Owners is the Rising Costs of Health Care Insurance

Most small business owners will tell you that the ever increasing cost of their health care insurance premiums is one of their largest concerns. Small business typically does not have a large enough profit margin to absorb prices increases of the magnitude that we have been facing with health care insurance costs.

Since the year 2000, health care insurance has realized a double digit increase each year. With experts predicting an average increase of ten percent for health care insurance in 2005, that will be the fifth consecutive year of above average rate increases. Many small business owners just do not know if their business can absorb another price increase, and how they can possibly continue to offer health care insurance to their employees.

When Health Care Premiums Go up, Small Business Must Either Pay It or Pass It On

Every time there is an increase in the cost of the health care costs, the small business owner faces a choice. Neither of the options are a favorable one. The small business owner must either choose to absorb the health care insurance increase on his own, pass the cost of the health care increase on to the employee, or do some combination of the two.

Surveys of small business owners have shown that through the 2000s most small business owners have done some form of a split with the employee when the health care increases have come along. The most common is a 50/50 split where the small business pays for half of the price increase and the other half gets attached to the portion of the health care insurance premium which is paid by the employee.

No matter how the small business owner handles the health care insurance increase, each time that he much face an increase, the damage and the risk to the small business increases.

The Small Business Often Suffers When Health Care Increases Come Along

If the small business owner decides that the small business will absorb the health care insurance increase, the harm done to the small business is in the form of more of the already taxed profit margin gets taken up with operating expenses. This puts the business at risk of going out of business if profit base can not be increased accordingly to cover the health care increase.

If the small business owner decides to pass the health care insurance increase onto his employees, this poses another risk for the small business. In today's competitive market it is difficult to attract and retain good employees if you are not offering them a good, affordable health care solution. By passing the health care insurance increases on to the employees, the small business owner is running a risk of loosing good employees to other jobs with better health care benefits.

Health care expense is a major problem in America, with small business owners and employees making up the majority of the victims. New solutions are needed for affordable health care for small business.