Survey Finds Maine Small Businesses Shifted Health Care Costs to Employees in Recent Years

(Augusta, ME) The Maine Center for Economic Policy (MECEP) released today the findings from a 2004 survey of Maine small businesses, co-authored by Lisa Pohlmann and Frank O’Hara.

The survey of Maine small businesses with 2-49 employees conducted in August 2004 showed that 53% of small businesses were offering any employee health coverage in 2004, with 8% having dropped coverage between 2002-2004.

In response to rising premium costs, firms had shifted more of their health care costs onto their employees in the form of higher deductibles and co-pays. Small businesses that offered health insurance paid an average of 84% of the premium for their employees, with one out of three paying 60% or less. On average these firms paid less than half of the premium for their employees’ families. A worker who wants family insurance has an average monthly premium cost of over $400 a month. One out of four small businesses delayed wage increases to their employees to pay for health insurance at their last insurance renewal.

Comparing these results to a survey conducted in 1999 by MECEP, the smallest businesses (2-10 employees) had a significant decline in rate of coverage between 1999-2004, from 62%-43%. This follows national trends.

Low-income workers were less likely to be offered health insurance in small firms. Over 4 in 5 workers with an annual income over $20,000 are offered health benefits in the respondent small businesses; but only 1 in 4 full-time workers earning under $13,000 are offered health benefits.

Small businesses want to provide health benefits as a matter of principle (85%), and in order to attract and retain employees (76%). Yet the cost of health care was a moderate to major concern for 95% of the respondents. One out of three small businesses said they would cut back further on coverage with an insurance rate increase of up to 10%.

“The health care crisis in this country has hit small businesses very hard,” said Lisa Pohlmann, MECEP associate director and co-author. “Maine is a small business state and we must continue to work on policy solutions to help ensure their employees have health coverage. This is important to the entire state economy.”

For more information:
Lisa Pohlmann