Health Benefits a Victim of Recession

Small businesses around the country are trying to figure out how to trim costs to help them through these tough times. On the chopping block: health-care benefits.

In recent years, as health-care costs have gone up, small businesses have covered fewer and fewer of their employees. And according to a story in the New York Times, the pace of businesses dropping coverage has accelerated because of the recession. Less than half of companies with fewer than 10 employees now offer health benefits.

“You can’t cut your rent unless you move, you can’t cut your Internet, you can’t cut your phone – so where do you cut?” said one business owner in the story. “When you’re not taking a dime out of the company, at some point you have to question whether you’re just working to pay everyone else’s bills.”

Even when companies aren’t eliminating coverage, more small companies are turning to high-deductible plans, where consumers are on the hook for more of the costs. Some business owners aren’t even covering themselves in these tough times. I’ve spoken with business owners recently who have cut off their own coverage to try to save their companies.

With the Obama administration bogged down by the economic and financial crisis, no one knows when the president will turn to the health-care reform he advocated during the campaign. The proposed stimulus bill extends coverage for the unemployed and the uninsured but so far doesn’t include breaks for businesses that cover their employees. In the meantime, small-business owners face rising premiums and increasing costs of care – all while struggling to get through a recession.

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