One of the most startling facts about health insurance in the United States is that almost all employees of large companies have it, but many employees at small companies do not. Data from the Kaiser Family Foundation shows that almost 98 percent of employees of businesses with 200 or more employees, 90 percent of businesses with between 25 to 49 employees, and 75 percent of employees at businesses with between 10 and 24 employees, but only half of the people employed in businesses with less than 10 workers, have such coverage.
Moreover, new small firms are less likely than more established ones to offer health insurance to their employees, with only 23 percent of new firms offering it to their workers. As these businesses mature, some of them are able to offer health insurance, particularly those that manage to grow. But many of them are not.
What do these facts mean? The problems of limited health care coverage that stem from our reliance on an employer-based health insurance system fall mostly on small businesses, particularly new small companies. If we want to maintain an employer-based health insurance system and maintain coverage of a significant portion of our workforce, policy makers need to come up with programs that help small businesses obtain health insurance for their employees, particularly when they are first starting out.
If we don’t do that, we will be left with a health insurance coverage problem that will make working in the small business sector problematic for many people.
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About the Author: Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of eight books, including Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By; Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures; Technology Strategy for Managers and Entrepreneurs; and From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company.