Only half of America’s smallest businesses now offer health coverage to their workers because many say steady cost hikes have made it too expensive to afford a benefit that nearly all large employers still provide.
A new study by the Kaiser Family Foundation finds 50% of companies with three to 49 employees offered coverage this year—down from 59% in 2012 and 66% more than a decade ago.
“There’s just not as much money around for compensation, including benefits,” says Gary Claxton, a Kaiser vice president and lead author of the nonprofit health policy organization’s annual health benefits study.
Employer-sponsored coverage is the most common form of health insurance in the United States, covering an estimated 151 million people under age 65, Kaiser says. The federal Affordable Care Act requires all companies with 50 or more full-time employees to offer it.
Companies get a tax break for offering these benefits, and many employers also see them as a critical tool for attracting and keeping workers, even if they aren’t required to because they are small or rely on part-time workers.
Kaiser found that 96% of businesses with 100 or more workers provided health benefits, or nearly twice the percentage of the smallest companies.
Cost was the main reason cited by 44% of those small businesses that don’t offer benefits, while 17% say they were too small to offer coverage. Other employers didn’t offer the benefit mainly because their workers were covered under another plan like a spouse’s or because most employees were part-time or temporary.
