BCBSA-EBRI Survey: Small Business Say Tax Credits Will Enchance Ability to Provide Health Benefits to Workers

1/27/2003

From: John Parker of Blue Cross and Blue Shield Association, 202-626-4818; e-mail: john.parker@wro.bcbsa.com

WASHINGTON, Jan. 27 -- A majority of small businesses say that federal tax credits will enhance their ability to provide healthcare benefits to their employees, according to the 2002 Small Employer Health Benefits Survey released today by the Blue Cross and Blue Shield Association (BCBSA) and the Employee Benefit Research Institute (EBRI).

The study found that a majority, 75 percent of the small firms that did not offer coverage, said that they would consider offering healthcare benefits if federal tax credits were available. More specifically, 86 percent of the small firms support tax breaks they could use to reduce health insurance costs for low-wage workers.

The study also found that 61 percent of the small businesses reported that the inability of their workers to afford their share of premiums is a major reason why the firms did not offer healthcare coverage.

"BCBSA has long advocated the use of tax credits as a way for small firms to provide healthcare coverage. The study reinforces the fact that small employers would endorse and ultimately benefit from such a solution," said BCBSA President and CEO Scott P. Serota. "This is the time to act on our nation's commitment to reduce the number of uninsured. The passage of legislation that provides tax credits to small employers is an important first step.

"The Blue Cross and Blue Shield companies are leaders in championing healthcare affordability, and a key part of this effort is to minimize the impact of rising healthcare costs on small businesses," said Serota. "We need to start now to address the needs of small businesses, especially firms with low-wage workers."

President Bush is expected to highlight the issue of the uninsured in his Jan. 28 State of the Union message. The administration and many members of Congress have endorsed tax credits as a way to increase healthcare coverage for low-wage workers and to address the rising number of uninsured Americans.

The 2002 BCBSA-EBRI study was conducted to better understand the health coverage decisions made by small-business owners, and with that knowledge, identify potential solutions to expand access to benefits and reduce the number of uninsured Americans. In 2001, half of all uninsured workers were in private firms with fewer than 100 employees. Approximately two-thirds of low-wage workers in firms with fewer than 10 employees are uninsured.

When asked to identify the leading factors driving up the cost of healthcare, 83 percent of the respondents identified medical malpractice insurance as the leading cost driver followed by hospital (81 percent) and prescription drug (79 percent) costs.

The study was conducted through telephone interviews with health decision makers for 1,000 companies with 2 to 50 employees across the nation. Firms interviewed included those that offered health benefits (502) and firms that did not offer benefits (498). The study builds on earlier research conducted by BCBSA and EBRI in 2000. A complete summary of the 2002 survey findings can be found at http://www.BCBSHealthIssues.com.

The Blue Cross and Blue Shield Association is made up of 42 independent, locally operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for 84.7 million -- nearly 30 percent -- Americans. For more information on Blue Cross and Blue Shield Plans, please visit www.BCBS.com. For more information on Blue Cross and Blue Shield Association's policy positions and the healthcare debate, visit http://www.BCBSHealthIssues.com.