Taking the Temperature of Small Business: Owners in California Say TheyÂ’re Squeezed Between Soaring Health-Care Costs and Going Uninsured

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A recent survey by the National Association of Professional Employer Organizations (NAPEO) reveals a growing frustration amongst small employers in the area of employee health benefits. Particularly in California, rising insurance premiums are forcing many employers to pass costs on to their staff, while others are considering dropping health benefits completely.

Ninety Years of Health Insurance Reform Efforts in CaliforniaÂ

After pay, health insurance is the most important inducement small businesses use to recruit and keep workers. Yet more than half of the 365 small businesses in a recent survey said their premiums rose as much as 10 percent this year.

Almost one in 10 told the National Association of Professional Employer Organizations (NAPEO) they would dump their health coverage next year or are unsure about it.

“This is another wake-up call,” said Michael Roberts, Benefits Manager of CPEhr, a Los Angeles-based HR Outsourcing Firm. “Soaring health insurance costs in California are hitting small businesses especially hard, and these businesses employ the vast majority of workers. This is an extremely troubling development, not just for small businesses and their workers, but for the entire economy.”

The trade association surveyed members’ clients in November and found that health care costs were their second-biggest worry after attracting workers. Many of these companies said they will pass at least some costs along to employees next year. One in five said they would raise co-payments for office visits or deductibles; one in four said theyÂ’d raise premiums.

A report recently released by the California State Library, entitled, “Ninety Years of Health Insurance Reform Efforts in California” by Michael Dimmitt, Ph.D of the California Research Bureau, reviews the history of health insurance in California dating back to 1918. It reveals some startling facts, and reasons for even greater concern:

  • Between 1961 and 2002, health care costs increased almost without interruption. No effort to contain them has proven successful over the long term.
  • Federal programs provide health care coverage to over 7.4 million Californians. If the programs were not in place, the number of uninsured in the state would double.
  • More than 20 percent of Californians, 6.6 million people, currently lack health care coverage over the course of the year according to research conducted for the California Healthcare Foundation.
  • Of those without health insurance, as estimated 75 percent are working people and their families.
  • As a consequence of the growth in premiums, the number of people covered by health insurance in California decreased from 64.6 percent to 54.7 percent between 1987 and 2005.

According to the NAPEO survey, nationwide, the numbers have stabilized, with 71 percent of employers indicating they will continue to insure their workers in the coming year – but another five percent remain unsure about continuing.

Professional employer organizations, such as CPEhr, pool thousands of employees under one roof and provide cost effective management of small employersÂ’ health insurance plans. Additionally, PEOs help small businesses outsource their time-consuming human resources chores, such as payroll, HR policies and risk management, so owners can focus on making a profit.

To review the NAPEO survey report, go to http://www.napeo.org/newscenter/research.cfm.

Ari Rosenstein, Marketing Director 310.734.4222/ arosenstein@cpehr.com
Monique Stennis, Marketing Specialist 310.860.2221/ mstennis@cpehr.com

About CPEhr
Founded in 1982, CPEhr is one of the largest, privately owned human resources and professional employer outsourcing (PEO) firms in California. With 25 years experience in the California market, CPEhr has an advantage in its knowledge of statewide employment challenges. CPEhr provides a personalized service that extends to 35 states. CPEhr offers an array of integrated human resources services that includes: Employee administration, human resources and labor law compliance, payroll and tax administration, benefits administration and compliance, workersÂ’ compensation administration, risk management, training and development and recruitment.

This press release was distributed through eMediawire by Human Resources Marketer (HR Marketer: http://www.HRmarketer.com) on behalf of the company listed above.


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Ari Rosenstein
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