California Small Businesses More Likely to Offer Health Insurance After Learning of Key Provisions in Health Care Law

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Forty-eight percent of small employers in California are unaware of key provisions—tax credits and exchanges—in the new national health care law, according to a report released today by Pacific Community Ventures. Yet, research also shows that California's small business owners are much more likely to offer health insurance after they learn about these key provisions. With more than 2 million Californians without health insurance living in a household headed by someone who works in a small business, there is a significant opportunity to cover great numbers of uninsured.

This research provides powerful insight into understanding who the small business population is in California

When informed about key provisions in the national health care law, California’s small businesses are more likely to offer health care coverage to their workers, according to a new report released today by Pacific Community Ventures. The report, Health Care and Small Business: Understanding Health Care Decision Making in California, stresses the importance of a comprehensive but targeted communications effort to small business owners about the Patient Protection and Affordable Care Act (ACA) in order for smaller companies to benefit from key provisions in the law.

“Small businesses are the backbone of our economy and it’s critical that small business owners are educated about the benefits the Affordable Care Act provides to them and their employees,” noted Robert K. Ross, M.D., President and Chief Executive Officer of The California Endowment, which funded the report. “This report makes it clear that we must move beyond the political rhetoric so that all Americans, including small business owners, are provided with accurate information so they can make informed decisions about their health coverage.”

The report, which surveyed 804 California small business employers with fewer than 20 workers, found that 43 percent of small businesses not offering insurance said they would be more likely to do so once they learned about the health care tax credits offered by the law. The report found that as many as 48 percent of small business employers in the state are unaware of provisions in the law that benefit small businesses. Only nine percent are aware specifically of the health insurance exchanges, which the state is establishing to drive down costs.

“This research provides powerful insight into understanding who the small business population is in California; where owners get their information to make decisions; and what messaging will appeal to them or dissuade them from offering health care coverage in the workplace,” noted Ben Thornley, Director at Pacific Community Ventures, a nonprofit organization committed to creating jobs in low-income communities. “For the sake of expanding coverage and bolstering our economy with a healthy, productive workforce, it’s imperative that our state undertake an information campaign to small business owners through sources they trust. When owners hear about the ACA, they like it and want to take advantage of key provisions.”

The findings also revealed that advisors to small businesses – health insurance brokers and accountants – will continue to play the critical role of providing information and support to small businesses navigating the ACA, notwithstanding the introduction of provisions including the small business (SHOP) exchanges. Accountants and brokers were trusted a “great deal” or “somewhat” as a source of information by 68 percent and 66 percent of small business owners who use them. The next closest trusted source of information was national small business associations, with 36 percent.

However, the report notes that the story is complicated for health insurance brokers. For small business owners that do not have one, brokers are the least trusted source of information, with just 22 percent of small business owners trusting them a “great deal” or “somewhat.” Conversely, the report shows that 70% of owners without insurance brokers expressed a notable level of trust in accountants.

And while just six percent of survey respondents said they would go directly to the exchanges, without consulting a broker, the exchange and its likely impacts remain a source of uncertainty and opportunity. Chris Edmundson, owner of San Francisco’s GAMAGO, currently provides his 12-employee workforce with medical coverage utilizing a broker. “I’m hopeful that the exchange web site will give me everything I need to make an informed decision,” said Edmundson. “With the exchanges, I wouldn’t see the need for a broker; it seems redundant.”

Top findings from the report include:

  •     Small business owners’ positive perception of ACA is the number one indicator that they will take advantage of the new provisions.
  •     Minority business owners are among the most likely to take advantage of ACA provisions after being informed, with 48 percent more likely to provide benefits after learning about the exchanges. The report also found that minority businesses are the hardest small business population to reach.
  •     Sixty-one percent of California businesses with two to nine employees offer health insurance while 78 percent of those with 10 to 19 employees offer coverage.
  •     The most effective way to communicate with small business owners about the ACA is to highlight the potential reduction in health care costs due to the pooling of a large number of small business buyers on the new exchange.

Through focus groups, a telephone survey and in-depth case studies, the report’s authors sought to discover how small business owners navigate the insurance market, and to determine how to most effectively inform them about health care reform. To download the full report, visit

California’s small business (SHOP) exchange can significantly benefit small business employers and their workers — but all those involved in setting it up must engage in a productive conversation about how best to do so if it is to be successful. To help meet the needs of the business community and guide these discussions, the Small Business Majority, with the support of The California Endowment, will host a series of educational forums with the first on Friday, October 14. For more information about these forums, go to

Pacific Community Ventures builds responsible small businesses to create jobs and opportunities in lower-income communities. Over the past decade, PCV has supported more than 1,300 small businesses, helping to create and maintain over 23,000 jobs. Pacific Community Ventures is creating quality jobs—cost-effectively—for the people who need them most. We accomplish this mission through two core nonprofit programs, Business Advising and Insight, and through our affiliated for-profit equity funds. To learn more, visit


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Maureen Futtner
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